DOI:
https://doi.org/10.63385/jemm.v2i2.406Keywords:
ARDL Co-Integration, Debt Overhang, Debt Servicing, Fiscal Sustainability, Nigeria, Public DebtAbstract
This paper systematically investigates the disaggregated effects of public debt on fiscal stability in Nigeria from 1980 to 2022, a period marked by structural adjustments, fiscal crises, oil price volatility, and changing debt management practices. After obtaining stationarity, data was analysed using the Autoregressive Distributed Lag (ARDL) approach. The results indicate that domestic debt, debt service payments, foreign reserves, currency rates, and private investment all contribute to macroeconomic instability. Foreign direct investment inflows improved fiscal stability in the long and short term. External debt, interest rates, and trade openness all have different immediate and long-term repercussions. Despite the fact that public borrowing is a crucial tool for promoting development, the results show that Nigeria's debt profile has been undermined by poor revenue capacity, ongoing fiscal deficits, governance issues, and inefficient use of borrowed funds, To reduce vulnerability to external shocks, the study suggests strengthening domestic revenue mobilization, prioritizing concessional borrowing, improving debt management transparency, increasing public investment efficiency, and diversifying the economy. These steps are critical for achieving sustainable debt management and ensuring that public borrowing contributes meaningfully to long-term economic growth.
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This work is licensed under a Creative Commons Attribution 4.0 International License.