Implication of Fiscal Deficit Financing on External Debt Sustainability in Nigeria

1
Olayide Olayinka Olaoye
Olayide Olayinka Olaoye
2
Sunday O. Odumeru
Sunday O. Odumeru
1 Ajayi Crowther University

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GJHSS Volume 22 Issue E7

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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.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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Olayide Olayinka Olaoye. 2026. \u201cImplication of Fiscal Deficit Financing on External Debt Sustainability in Nigeria\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 22 (GJHSS Volume 22 Issue E7): .

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An in-depth analysis of fiscal debt impact on Nigeria's economic stability and sustainability.
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GJHSS Volume 22 Issue E7
Pg. 35- 43
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Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

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GJHSS-E Classification: DDC Code: 346.42022 LCC Code: KD1554
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February 9, 2023

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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.

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Implication of Fiscal Deficit Financing on External Debt Sustainability in Nigeria

Olayide Olayinka Olaoye
Olayide Olayinka Olaoye Ajayi Crowther University
Sunday O. Odumeru
Sunday O. Odumeru

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