EXAMINES DEBT SERVICING ON ECONOMIC GROWTH IN NIGERIA

This study examines debt servicing on economic growth in Nigeria, focusing on the implications for fiscal policy flexibility, debt sustainability, and macroeconomic stability. Utilizing the autoregressive distributed lag (ARDL) model, the study provides valuable insights into the dynamics of debt servicing and its macroeconomic effects. The findings reveal a positive and significant impact of external debt on real gross domestic product (GDP), suggesting that external borrowing contributes to economic growth, consistent with theoretical expectations. However, debt servicing exhibits a significant negative correlation with real GDP, indicating that rising debt service obligations adversely affect economic performance, posing challenges for policymakers and investors. The study also uncovers a positive but statistically insignificant effect of domestic debt on real GDP, implying that while domestic debt supports growth, its role requires further examination. Additionally, interest rates display a positive and significant relationship with economic growth, highlighting their influence on GDP dynamics. These findings underscore the dual challenges of managing debt servicing and fostering sustainable growth in Nigeria. The study emphasizes the importance of balancing external and domestic debt strategies while ensuring that debt service obligations do not undermine fiscal flexibility or macroeconomic stability. Recommendations are provided to guide policymakers in implementing prudent debt management practices to enhance Nigeria's economic resilience.