Public Debt Management, Fiscal Sustainability, and Economic Development in Nigeria

This study investigates the relationship between public debt management quality, fiscal sustainability indicators, and economic development outcomes in Nigeria for the period 2005 to 2023. Nigeria's public debt has grown substantially in recent years, driven by fiscal deficits, foreign borrowing for infrastructure, and domestic debt market development. Concerns about debt sustainability have intensified following the sharp decline in oil revenues and the growing proportion of revenue consumed by debt service obligations. This study uses secondary time series data sourced from the Debt Management Office, the Central Bank of Nigeria Statistical Bulletin, and the National Bureau of Statistics. Key variables include total public debt-to-GDP ratio, debt service-to-revenue ratio, external debt composition, and fiscal deficit. Economic development outcomes are measured using per capita income growth, human development index components, and infrastructure investment rates. Vector autoregression and impulse response functions are employed. Results reveal that Nigeria's debt-to-GDP ratio has crossed the 40 percent threshold in recent years and that the debt service-to-revenue ratio now exceeds 80 percent in some fiscal years, indicating acute debt servicing pressure. Debt composition shows a shift toward more expensive domestic commercial borrowing. The study concludes that Nigeria's current debt trajectory raises serious fiscal sustainability concerns that require urgent corrective fiscal consolidation. It recommends prioritizing concessional external borrowing, accelerating non-oil revenue mobilization, and implementing strict new borrowing controls aligned with the Fiscal Responsibility Act provisions.

Keywords: public debt, fiscal sustainability, economic development, Nigeria, debt service.