Total external debt is the sum of public, publicly guaranteed, and private nonguaranteed longterm debt, use of imf credit, and shortterm debt. In the latest reports of nigeria, current account recorded a deficit of 3. Iv how the external debt management has performs their responsibility in managing the external debt of nigeria. Ascertain the impact of external debt on gross domestic product gdp in nigeria. At endseptember 2014, external debt of the federal and state governments is $. Impact of external debt servicing on economic growth in. By sa saad cited by 3 latest figures show that nigerias external debt stands at us$11. And experienced a sharp rise in external debt, rais ing new. External debt and economic growth journal of economic. External debt, economic growth, nigeria, economy, gdp. 7 while the thresholds for the pv of external ppg debttogdp and pvto revenue ratios are breached for 4 and 2 years, respectively, the debt serviceto.
Analysis of external debt and economic growth in nigeria. By abfca onakoya 2017 cited by 16 before the global oil crisis in the late 170s, nigeria external debt was minimal erhieyovwe and. The study recommends that nigeria should embark on strict debt. Analysis of the impact of external debt on economic growth in. In addition, external debt contributes positively to. Five subsaharan african countriescongo, cote divoire, gabon, nigeria and. The composition of external debt outstanding, and the terms of borrowing at fixed or floating rates. Findings revealed that external debt burden had an adverse effect on national income and per capita income. Nigeria public external debt 20002020 data 20212023. By so akinboye 2010 cited by 2 nigerias external debt profile and efforts toward its alleviation. Nigerias external borrowing and economic growth iiard.
By lu okoye 2017 cited by 13 failed to establish the threshold level of external debt in nigeria. The paper examines the nigerian external debt crisis and efforts made. By sn udeh 2016 cited by 61 data on gross domestic product gdp, external debt stock and external debt. Impact of public external debt on exchange rate in nigeria. The study called for drastic reduction in the value of external debts taken by nigeria. Between external debt and the explanatory variables. However, most borrowings come with interest attached, which results in debt servicing. 1 introduction in 2005, nigeria concluded a debt relief agreement with the paris club on a us$ 30 billion debt with these creditors. Effect of external debt on nigerian economy munich. External debt management and economic growth in nigeria. Causes of nigerias external debt problem numerous factors contributed to the increased size of nigerias external debt. From the late 170s because of poor macro economic management and declining prices of crude oil, the countrys external debt began its upward movement.
The results indicated negative sign for external debt with insignificant regression coefficient at 0. Government debt constitutes both domestic and external debt. This research work empirically examined the impact of external debt on sustainable economic growth with particular emphasis on nigeria between 1802010. This study investigates the relationship between nigerias external debt and economic. Adepoju, salau and obayelu 2007 analyzed the effects of external debt management on the economic growth of nigeria for a period between 162 to 2006 using timeseries data of the various bilateral and multi lateral arrangements. The main objective of the study is to determine whether external debt has significant relationship with economic growth in nigerian. 41 billion % of gdp with states government share being us$3. External debt stock, more than double the level of. By mi raheem 14 cited by 8 the paper addresses some of the major issues in external debt management from the point of view of a borrowing country. This research work empirically examined the impact of external debt on sustainable economic growth with particular emphasis on nigeria between.
3 usd million from 2000 until 2020, reaching an all time high of 37267. The external debt problem in africa wiley online library. External debt on economic growth in nigeria between 181 and 2014, the study used autoregressive bounds testing method distributed lag ardl and ordinary least squares technique. However, some studies have attempted to investigate the relationship between extemal debt and economic growth. Beginning from 178, the external debt stock began to grow astronomically, rising from us $0. 2 domestic debt includes funds raised through financial assets such as treasury bills and bonds and money borrowed from other locally owned financial institutions. That high level of external debt led to devaluation of the nations currency, increase in retrenchment of workers, continuous strikes and poor educational system. By ts osinubi 2010 cited by 30 foreign exchange earnings and rising fiscal deficits and external borrowing. In this paper, the african external debt problem with particular reference to nigeria and morocco is extensively analysed, and statistical indicators show. Effect of external debt on economic growth of nigeria core. External debt and economic growth in subsaharan african. 0 nigerias public debt profile and its sustainability 2.
The study also found that the main determinants of nigerias external debt are gross domestic product, debt service and exchange rate. An assessment of the impact of external debt on economic. Nigeria has witnessed about three decades of external. By s ohiomu 2020 cited by 2 article information, pdf download for external debt and economic growth. Nigerias debt crisis has attracted considerable attention since the end of the protracted. Pdf this study investigates the relationship between nigerias external debt and economic growth, between 175 and 2006. 2003, external debt burden had dramatically limited nigerias participation in the world economy and the attendant debt servicing obligations continue to.
Gdp, gmm, kpss, external debt, external debt service. With continuous increase in public expenditures, and low capital formation in many developing countries, many governments have resorted into borrowing either or both within and outside the country. On the determinants of external debt in nigeria by ibrahim. 44m in the second quarter of 2018 and record low of usd3627. Aminu_umaru2007@ 2 department of management technology, school of management and information technology. V what are the recent developments in the debt management i. It is well known that an unsustainable external debt can create several undesirable.
E debt relief initiative 2006 statement of the hypothesis the two hypotheses stated in null form to be tested in this study are. Data bear out these concerns and suggest a need to look comprehensively at all forms of nonfinancial debt. Impact of external debt on economic growth in nigeria. According to omoleye, sharma, ngussam, and ezeonu 2006, nigeria is the largest debtor nation in the subsaharan. Determining the optimal public debt threshold for nigeria. The study specifically examined the influence of external debt, external debt service payment and exchange rate on economic growth proxy as real gross domestic product. Nigerias external debt can be traced back to the pre independence period, though the debt level was minimal until 178, when the first jumbo loan of more than $1. The above statistics depicts an opprobrious economic situation. External debt is a form of financing borrowed by a country from foreign lenders and often takes the form of tied loans. Nigerian debt profile and its effect on economic growth. Effect of external debt on economic growth covenant.
Between 158 and 2004, nigerias external indebtedness rose from us$28million to over us$35billion. Between external debt and economic development on the one hand and the existence of long run relationship between external debt and economic development on the other. Similarly, the external debt can be from bilateral, multilateral or commercial sources. Debt relief, external debt, economic growth, nigeria, imf, vec. 0 billion was raised from the international capital market icmdebt management office dmo, 2004. In addition, some of nigerias debt is denominated in european and japanese currencies, which appreciated visavis the u.
We have seen this recently, as first private and now public debt have been at the centre of the crisis that began four years ago. This study investigates the relationship between nigerias external debt and economic growth, between 175 and. By the end of 2004, the nigerian governments total outstanding external. Pdf external debt in nigeria falade olufemi olusegun. This study concluded that the resultant effects of external debt on economic development in nigeria are negative and significant.
The countrys external debt was sustainable up to mid 170s. Nigerias total public debt portfolio as at september 30. Nigerias foreign debt quadrupled from $ billion in 180 to $36 billion in 10. Total external debt is debt owed to nonresidents repayable in currency, goods, or services. External debt stock had about 0% reduction around 2006 and ever since that period there has not been any significant increase in the external stock of debt in the country until the last quarter. According to debt management office dmo, nigerias external debt stock till 177 was less than us $0. This also led to a depression of the nigerian economy. Nigerian domestic and foreign debt national bureau. By lb ajayi 2012 cited by 213 ekiti state university. By o charles 2018 cited by 2 accepted 11th july, 2018. By bc nigeria 1 cited by 207 mounting external debt depresses investment through both a disincentive effect.
Effect of external debt on economic growth of international. By sibi ajayl 11 cited by 134 these two changes are significant to nigerias external debt. Assessing and managing external debt problems in nigeria. To reduce the adverse effects of external debt on the nigerian economy and make it sustainable the study recommends that an analysis of the. These were recycled in the form of loan with the pretext. By m muhammad abdulaziz 2020 nigeria was unbound since debt overhang, due to $18 billion debt write off. The effect of foreign debt on the economic growth of nigeria. By ne urama both domestic and foreign loan stood at ngn22.
The study revealed that external debt had negative impact on economic growth. The country agreed to pay us$ 12 billion, while an amount of. 04m from 2008 through 2018, reaching an all high of usd22083. By la sulaiman cited by 147 the findings from the error correction method show that external debt has contributed positively to the nigerian economy. The study make use of ordinary least square regression technique to draw out inferences on the relationship between external debt and economic growth. Nigerias huge external debt burden is an impediment to the economic growth and development of the country. The impact of nigerias external debt on economic development. Half of which were the counterpart of shortterm naira debt issued to. Determinants and sustainability of external debt in a.
By ca ezema 2018 cited by 1 empirical analyzed the impact of external debts on the economic growth in nigeria, 102016. External debt stock debt management office nigeria. The rationale for raising external loan by developing countries has always. Nigeria external debt crisis has provoked a pervasive and critical analysis by various scholars to. The debt management office dmo nigeria is a government agency established to centrally coordinate the management of nigerias debt. The impact of public debt on private investment in. The major factors include the rapid growth of public expenditure, particularly that on capital projects, borrowing from the international community at nonconcessional interest.
The impact of external debt on economic growth in nigeria. By os olasode 2016 cited by 12 the recommendations of this study are that nigeria government should ensure that debts incurred are channel towards productive uses and debt management. In recent years, oman external debt jumped significantly due to the decline in government revenues as oil prices decreased sharply. Thus, it is important for policy makers, financial institutions and individuals in oman to understand the relationship between the external debt and economic growth. Serving external debt may involve demand for foreign currency which tends to affect the exchange rate of the country. The management of nigerias external debt has been a major macroeconomic problem especially since the early 180s. By oa ogunlana cited by 5 in order to finance economic development and enhance the pace of economic growth, countries especially in developing world, resort to foreign borrowing to. The external debt stock in nigeria has shown a stable but rising trend which peaked in 2004 and then declined sharply in 2006. According to omotoye, sharma, ngussam, and ezeonu 2006, nigeria is the largest debtor nation in the sub saharan africa.
There is an alarm of another foreign debt problem in the country, considering its debt. External debt and domestic debt impact on the growth of. 68 usd million in the third quarter of 2004 and a record low of 3287. By co omodero 201 cited by 12 effect of external debt on economic growth and development of nigeria. Dollars category balance outstanding multilateral 6,825 world bank group ida 5,885 ifad 0 african development bank group adb 150 adf 580 edf 1. Debt crisis in nigeria has created quite a number of problems which has. By p ndubuisi 2017 cited by 32 while external debt stock has positive and significant effect on nigerias growth index. External debt, domestic debt and economic growth horizon. That they were assisting those countries achieve economic growth. By co omodero 2020 cited by 3 the result of the data analysis has shown that external debt does not improve consumption cost, but rather aids the rising cost of living in nigeria. 11% between 2006 and 2011cbn, 2007a, 2007b and 2012. 46 percent from 10 until 2020, reaching an all time high of 75 percent in 11 and a record low of 7.
Effect of external debt on economic growth of nigeria. 2 per cent from the level at enddecember 2012 cbn, 2013. For many years now, the countrys debt has been growing in spite of the efforts being made by the government to manage and minimize its crushing effects on the nations economy. If the rate of return from debt is higher than the service payment rate, it might be. External debt and the nigerian economy international. Economists believe that the problems nigeria faces today with debt servicing began around 185, a period that saw the total external debt of nigeria to all its creditors amount to about $1 billion. External debt and economic growth in nigeria international. This page provides the latest reported value for nigeria government debt to gdp plus previous. For instance, the countrys external debt was us$35.
Debt trajectories broadly resemble those in the previous dsa, with four of five indicators breaching respective thresholds under the baseline. Determining the macroeconomic factors of external debt. Ever since 2007, external debt has been on an increasing rate, as at 2018 nigerian total external debt stood at 7,775. 08 usd million in the fourth quarter of 2020 from 3185. In october 2005, nigerian government obtained debt relief of $18 billion from paris club. International debt statistics 2020 open knowledge repository. External reserve and exchange rate have positive and.
By ge festus 201 cited by 4 udeh, ugwu and onwuka 2016 worked on ascertaining the impact of external debt on economic growth in nigeria adopting an expost facto. The impact of external debt on the nigerian economy. High and rising debt is a source of justifiable concern. Rising nigerias debt is an impediment to economic growth and development. The burden of external debt is measured by the debtservice ratio. Their study concluded that accumulation of external debt adversely affected nigerias economic growth. Causes of nigerias external debt problem numerous factors contributed to the increased size of nigerias external debt which by the end of 2000, stood at us$2 billion. Determine the effect of external debt servicing on gross domestic product in nigeria. External debt burden and its determinants in nigeria core. External debt and domestic debt impact on the growth of the nigerian economy 1 aminu umaru, 2 ahmadu aminu hamidu and 3 salihu musa 1 department of economics, modibbo adama university of technology, yola, adamawa state, nigeria. It refers to a countrys repayment obligations of principal and interest for a particular year on its external debt as a percentage of its exports of goods and services i. By sa kharusi 2018 cited by 86 economic growth, prompted by continuous increases in omans external debt to. By bs omotosho 2016 cited by 11 in other words, foreign borrowing is at optimal up to the point where the marginal productivity of capital or investment equals the rate of interest on external debt.
For instance, in 2013 the cbn revealed that at us$8. In nigeria external debt to gross national income gni ratio fluctuates from 14. Meanwhile, during the sap era nigerias net transfers to external creditors absorbed 5 percent of gdp. External debt international journal of science and research. However, south africa performs better than nigeria in the application of external loans to promote growth. This study empirically examined the effect of external debt on economic growth in nigeria under the period of 37 years 1812017. Domestic debt showed a positive relationship with nigerias gdp and a significant regression coefficient at 0. Contribution of external debt on public investment in nigeria, the study adopts an investment model suggested by gour inchas and jeanne 2013 that an open economy can issue external debt. External debt as a percentage of the gdp was 100% in 10, 66% in 2000 and 75. This study empirically examined external borrowing sources and economic growth in nigeria employing time series data from the nigerian bureau of. Nigeria saw a sharp rise in its external debt between 186 and 13. This to a large extent will enhance the growth of the nigerian economy. Debt itself is not evil but lack of optimal utilization of externally derived fund should be associated with proper debt management and servicing problem. External debt and nigerian economic growth connection.
Shortterm debt includes all debt having an original maturity of one year or less and interest in arrears on longterm debt. By oo romanus cited by 12 department of accounting, ambrose alli university, ekpoma, edo state, nigeria. Pdf this research work was aimed at ascertaining the impact of external debt on economic growth in nigeria. The study sought further evidences on the effect of external debt on economic growth in nigeria.
Impact of external debt and its services burden to. 1 nigerias debt profile nigeria, like other developing countries, has benefitted from both external and domestic borrowing to finance its developmental goals over the years. In order to ameliorate the negative influence of external debt on economic. Determining the optimal public debt threshold for nigeria1.
Nigerian external debt drastically declined to 451. This study investigates the effect of the external debt burden on economic growth and development of nigeria. The fiscal and external positions, as nigerias oil and gas exports 84. External debt as interest paid on domestic loans remains in. This study examined the effect of external debt on economic growth in nigeria.
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