IMPACT OF EXTERNAL DEBT ON ECONOMIC GROWTH IN NIGERIA

This paper investigated the impact of external debt on economic growth in Nigeria from 1985 to 2018 using vector autoregressive (VAR) approach. The empirical results revealed that both external debt stock and external debt service exerted a negative and significant impact on economic growth. These outcomes entailed that when external debt stock changed by one-unit, economic growth declined by 0.495 unit. On the other hand, when external debt services changed by one-unit, economic growth declined by 0.017 unit. We concluded that external debt stock had been an impediment to economic growth in Nigeria over the period under study. We therefore recommended that policy makers should adhere strictly to the appropriate use of debt through efficient investment to foster growth and avoid excessive debt accumulation.