Implication of Fiscal Deficit Financing on External Debt Sustainability in Nigeria
The accumulation of debt for developmental purpose has failed to yield the desirable transformation. So, the study investigated the impact of fiscal deficit financing on external debt sustainability in Nigeria. The dual gap theory formed the basis of the study. Using annual time series data from 1981 to 2020 and the Autoregressive distributed lag technique, the study found that lagged external debt, exchange rate and fiscal deficit significantly impacts external debt servicing in Nigeria. Therefore, it was recommended that government should use external loans productively; public policy should be geared towards export promotion; and interest rate should be very low.
