For correspondence:-
Received: 24 April 2018 Accepted: 28 May 2018 Published: 30 June 2018
Citation: Debt Management and Economic Development in Nigeria (1981-2016). Account Tax Rev 2003; 2(2):75-90 doi:
© 2003 The authors.
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Abstract
Debt management remains a crucial issue to nations that took to debt for improving infrastructure and projects. The specific objectives of this study were to examine the effectof external debt, domestic debt, exchange rate and interest rate on economic development over the period of thirty-six years (1981 to 2016). Ex-post-facto research design was adopted for this study. Data were extracted from Central Bank of Nigeria Statistical Bulletin, National Bureau of Statistics, and Debt Management Office. The statistical tools employed include Co-Integration, Error Correction Model (ECM) and Ordinary Least Square (OLS) regression. The study found that external debt has significant effect, but it is negatively related in the short run and positively related in the long-run with economic development; domestic debt has significant effect, but it is positively related in the short run and negatively related in the long-run with economic development; exchange and interest rates have nonsignificant effect and have negative relationship with economic development in the short run, while in the long run, exchange and interest rates have significant effect, exchange rate has positive relationship while interest rate has negative relationship with economic development proxy with Real Gross Domestic Product. The implication of the findings is that proper debt management, taking cognizance of exchange and interest rates will enhance economic growth and development of the economy,. The study recommended that a country should take more of internal debt for short-term projects whileexternal debt for long-term projects. Also,government should vigorously pursue policies that could favourablystabilize exchange and interest rates for the benefit of the nation.
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