EFFECT OF NATIONAL DEBT ON REAL GROSS DOMESTIC PRODUCT IN NIGERIA (2009-2022)

ABSTRACT Over the past decades, high levels of public debt have turned into an inviting target for criticism among policymakers, professionals and other agents of economic development. The broad objective of this study is to evaluate effect of national debt on real gross domestic product in Nigeria. The study employed ex-post facto research design, using annual data that span between 2009-2022 for a time series data. The time-series data was adopted to test the relationship between the dependent and independent variables. Various pre and post estimate test were conducted by the study. Based on the unit root test result, the study employed ARDL Model to interpret the hypotheses with the aid of E-View 10.0 statistical software. The study found that in the long-run public debt servicing has positive and insignificant effect on real gross domestic product in Nigeria. Also in the long run both domestic debt and foreign debt have negative and insignificant effect on real gross domestic product in Nigeria. The study concluded that national debt hampers economic growth. Based on the findings, the study recommended that government should ensure that public debt is directed towards investments that have the potential to stimulate economic growth. Government should implement strict oversight mechanisms to ensure that borrowed funds (domestic debt) are used effectively and transparently. Government should negotiate favorable terms for foreign loans and prioritize projects with high returns on investment. Additionally, efforts should be made to diversify the sources of foreign loans to avoid over-reliance on a single creditor, thereby reducing the risk of losing control over strategic assets and minimizing exchange rate fluctuations.