Econometric modeling Sustainable debt management Policy reforms Infrastructure investment

This study investigates the relationship between public debt and economic growth in Nigeria from 1980 to 2022, focusing on GDP dynamics, inflation, exchange rates, and institutional factors. Against the backdrop of Nigeria’s rising debt-to-GDP ratio—projected to exceed 46% by 2025—the research addresses conflicting theoretical debates on whether public debt stimulates growth through investments or stifles it via fiscal instability. Employing a mixed-methods approach, the study combines quantitative analysis of time-series data (sourced from the IMF, World Bank, and Central Bank of Nigeria) with qualitative insights from policy documents. Econometric techniques, including OLS regression, ADF unit root tests, and Johansen cointegration analysis, are applied to evaluate the impact of debt on macroeconomic performance.
Results indicate a significant positive relationship between total public debt and GDP growth, suggesting that strategic borrowing for infrastructure and human capital development can enhance economic outcomes. The study concludes that sustainable debt management requires institutional reforms, diversified revenue streams, and transparent allocation of borrowed funds. These findings offer actionable insights for policymakers seeking to balance debt-driven growth with long-term fiscal stability in resource-dependent economies.