Evaluation of the Effect of Federal Government External Debts and Reserves on Economic Growth in Nigeria

Abstract

This study is to evaluated the effect of federal government external debts and external reserve on economic growth in Nigeria. The study spanned 2007– 2016. Gross Domestic Product formed the basis for economic growth The study adpoted the ex post facto as research design. The analytical tools used were unit root test and ordinary least square. The study found out that external debt stock had a negative and significant effect on real gross domestic product with the studied period and external debt service payment had a negative and non-significant influence on real gross domestic product with the sampled period. The study therefore recommended that external debts should be contracted solely for economic reasons and not for social or political reasons. This is to avoid accumulation of external debt stock overtime and prevent an obscuring of the motive behind external debt. The authorities responsible for managing Nigeria’s external debt should adequately keep track of the debt payment obligations and the debt should not be allowed to pass a maximum limit so as to avoid debt overhang.

Keywords: Federal government, External Debts, External Reserve, Economic Growth,  Nigeria