The effects of debt burden on the Nigerian economy

Abstract

This paper sets out to examine the impact of debt burden on the Nigerian economy. It specifically seeks to ascertain the effect of debt burden on the growth of the Nigerian economy. Nigeria’s data set from the CBN Statistical Bulletin volume 18, (2007) during the period 1970-2007 was used. It employs the ordinary least squares (OLS) to test the relationship between debt burden and the growth in the Nigerian economy. The finding shows that there is a negative relationship between debt stock (internal and external debt) and gross domestic product, meaning that an increase in debt stock will lead to reduction on the growth rate of Nigerian economy. Based on the above finding, it is recommended that the nation should avoid both external and internal borrowing in other to avoid huge debt problem.