Impact of public debt and debt servicing on economic growth in nigeria (1980-

2019) by Chukwu Benjamin Chidubem

ABSTRACT

This study examined the impact of public debt and debt servicing on economic
growth in Nigeria (1980-2019). The main objective of the study is to examine
the impact of public debt servicing on economic growth in Nigeria. The study
used multiple regressions. The variables under consideration were real gross
domestic product as the dependent variable while public debt servicing and
exchange rate are the independent variables. The ordinary least square (ols)
technique was used in estimating the relationship between the dependent and
independent variables. The research result showed that public debt servicing
has no significant impact on economic growth in Nigeria and thus insignificant
variable in determining economic growth in Nigeria. In addition that public
debt servicing has negative relationship with economic growth in Nigeria and
finally that there is no causality relationship between public debt servicing and
economic growth in Nigeria. Based on the findings of the work, the study
recommends that there is a need for the government to seek the diversification
of the economy away from oil as this will generate more revenue which will
reduce the effect of a downtrend in oil revenue which usually calls for debt.

INTRODUCTION

Background of the Study

Macroeconomic challenges and poor human conditions facing the developing nations
necessitate social and economic development plans, which have resulted in a fiscal deficit
due to a low-income base and consequently, lead to public debts (John & Muhammad, 2013).
By implication, a high level of public debt outstanding means high debt servicing due to an
increase in the budget deficit, financed by raising public borrowings thereby increasing the
level of the nation’s public debt. The accumulation of such debt may not only entangle the
nation in a debt trap but may also limit their sovereign fiscal options, which exposes the
country to macroeconomic risks such as compressing the social and development spending.
As a result, it would compromise the objectives of social and development plan for which the
debt was raised (Fan, 2007).
The role of public debts in promoting economic growth has overtime been studied by several
scholars, but recently it has undergone a very notable revival probably fuelled by the

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substantial weakening of public finances in different economies, occasioned by the 2008
financial crisis (Alejandro & Ileana, 2017).
Most countries borrow for two broad macroeconomic reasons including to either finance
higher investment or higher consumption and to circumvent hard budget constraint. These
imply that countries borrow to boost economic growth and reduce poverty level in the
economy. Accordingly, Soludo (2003) explained that the macroeconomic basis for which
public debt is accumulated is geared towards achieving the goals of high investments, and
consumption such as health and education or financing deficits in the transitory balance of
payments as well as to outwit hard budget constraints. It is also accumulated to lower
nominal interest rates abroad and lack of domestic long-term credit. On the other hand, the
reason for debt accumulation by the government to financing budget deficits is mainly an
attempt to complement the domestic savings to finance government projects and promote the
nation’s economic growth. In developing countries, where the advancement of the economies
depends heavily on the borrowings, debt overhang is inevitable.
Arguably, scholars postulated that the less debt-burdened countries tend to have higher rates
of growth than the higher debt-burdened nations. This is because the emerging countries and
less developed countries accumulate more debt for the reason of promoting economic growth
due to their inability to generate enough resources to bridge budget deficits gap and enhance
economic growth. Governments prefer debt accumulation in financing budget deficits due to
its anti-inflationary effects unlike imposing taxes or printing new money. Although taxes can
be used by the government to finance the budget deficit, it however, tends to distort the
structure of relative prices; and public debt, if it exceeds the carrying capacity of the
economy, creates problems of international equity among nations (Akram, 2011).
In the view of Tajudeen (2012), reasonable borrowing level by developing nations is likely to
accelerate their economic growth. When the economic growth of the nations improved, the
poverty situation in the economy will positively be affected. For growth to be encouraged,
nations at early development stages, borrow to compliment the inadequate domestic capital
stock and provide more investment opportunities with rates of return higher than that of their
counterparts in the developed economies.
Thus, if the borrowed funds and ploughed back funds are adequately utilized for productive
investments, it results in macroeconomic stability of the economy. Therefore, growth is likely
to increase and allow for timely debt repayments. According to Matiti (2013), the importance
of resources for government spending cannot be overemphasized. Most of the public revenue
is mainly provided by tax revenue while government borrowings topically bridge the resource

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gap between the receipt and the expenditure. The government borrowing could either be from
the domestic market or abroad.
Statement of Problem

Prior to the debt relief of 2005, the external debt accumulation of Nigeria rose from N2.3
billion to N328.5 billion in 1990, respectively. Between 2000 and 2010, the external debt
stock of the country were N3176.3 billion and N896.8 billion, respectively. By 2014, it
further rose to N1,631 billion, representing about 42% of the total real gross domestic product
(RGDP) ratio of the country. Recent debt levels, however, further compound the tragedy of
exposing the economy to external shocks resulting from the external debt overhang thesis
(Peter & Ferdinand, 2016). The upsurge in the external debt accumulation of the country was
blamed on the persistent hike in the general price level, fiscal imbalances, excessive
government spending and inadequate growth in the gross domestic product as well as the
decline in public revenue since the commencement of the oil crisis of the early 1980s.

Furthermore, the domestic debt in Nigeria had up till now been managed by the Central Bank
of Nigeria (CBN) via issuance of government instruments including the Treasury
Certificates; Treasury Bills (NTBs), Treasury Bonds and Federal Government Development
Stocks. The strategy of debt management adopted had led to inefficiencies, which resulted in
fundamental challenges. In considering these difficulties, an autonomous debt management
office (DMO) was established by the government with the aim of achieving efficient debt
management in the economy (Sunday et al., 2016). DMO was established in 2000, charged
with the responsibility to coordinate the management of debt for all government levels in the
country. While the Federal government guaranteed the external borrowings of the state
governments, the domestic borrowings of the states require analysis and confirmation by the
Federal Government in line with the guidelines and clear criteria, which illustrates that the
states can repay the debt based on their Federation Allocation and internally generated
revenue (Sunday et al., 2016). Generally,

Nigeria’s debt profile for the past decades has generated much concern among the policy-
makers, scholars, and economists given the high level of the public debt without
corresponding economic growth in the economy. The most significant and the first rising in
the public debt of Nigeria occurred in 1987, with the total public debt being N137.58 billion,
representing over 96%. Subsequently, the public debt in Nigeria increases unabated such that
in 2004, the total public debt was N6, 188.03 billion. In 1986 however, the total debt which

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was largely driven by the domestic debt sharply witnessed a reversal and was dominated by
the external debt. Thus, the dominance of the external debt, as well as the continuous rise in
total debt, remained upward side until 2005, when debt relief was granted to the country by
the Paris Club (Sunday et al., 2016).

Consequently, the debt forgiveness saw the total debt as well as the external debt plummeting
by 60% and 90.8%, respectively between 2004 and 2006 to N2, 533.47 billion and N451.5
billion. Incidentally, as external debt declined, domestic debt continued to rise unabated.
Hence, in 2011, the total debt that was driven by the domestic debt had exceeded the 2004
level and stood at N6,519.65 billion. By 2012, Nigeria‟s total debt had hit an all-time height
of N7,564.4 billion. Between 2006 and 2012, the domestic debt had accounted for about 82 to
87% of the total debt (Sunday et al., 2016). It is against this backdrop, that this research
investigates the impact of public debt accumulations on economic growth in Nigeria using a
disaggregated approach.

Research question

The following research questions will guide this study

1. What is the impact of public debt servicing on economic growth in Nigeria?

2. What is the causality relationship between public debt servicing and economic growth
in Nigeria?

Objectives of the study

The broad objective of the study is to examine the impact of public debt and debt
servicing on economic growth in Nigeria, specifically this study seeks to:

1. To investigate impact of public debt servicing on economic growth in Nigeria.

2. To determine the causality relationship between public debt servicing and economic
growth in Nigeria

Hypotheses of the study

The following hypotheses will the tested in the course of this work

H0: public debt servicing has no significant impact on economic growth in Nigeria.

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 H0: There is no causality relationship between public debt servicing and economic growth
in Nigeria.

Significance of the study

The study will prove a valuable contribution to available literature on the discourse.
This is because it focuses on evaluating the impact of public debt and debt servicing on
economic growth in Nigeria.

The government of Nigeria will find the findings of the research relevant as it will
propel some policy reforms and adjustments regarding public debt and debt servicing in
Nigeria.

To the Lecturers and students this research work is a very good teaching and learning
material for both lecturers and students in higher institutions who wish to learn about public
debt and debt servicing and its effect on the economy of Nigeria.

To researchers this study shall serves as a reference material for further research on
this topic.

Scope of the study

The study focuses on the impact of public debt and debt servicing on economic growth in
Nigeria from 1980 to 2019. The data required for this study are secondary time series data on
public debt servicing and exchange rate which are the independent variables while real gross
domestic product is the dependent variable all data ranging from 1980-2019. This range of
year is chosen based on the data avaliable and were collected by the researcher. Public debt
are meant to be repaid thus public debt servicing is the money required to cover the
repayment of the interest and principal of a debt for a particular period. Real gross domestic
product best used to determine economic growth because it takes into account the effects of
inflation and deflation. Exchange rate affects external debt. If the values of a country’s
currency keeps reducing the country (debtor) loses because the monetary value of their
currency that would be used to pay back debt will reduce. Hence they will pay more in value.

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 LITERATURE REVIEW

Conceptual Literature

The Concept of Debt

Debt according to Oyejide, Soyede and Kayode (2004) is the resource or money used
in an organization that is not contributed by its owner and does not in any other way belong
to them. It is a liability represented by a financial instrument or other formal equivalent.
The Concept of External Debt
Arnone, Bandiera and Presbiterio (2005) defined external debt as that portion of a
country’s debt that is acquired from foreign sources such as foreign corporations, government
or financial institutions. External debt is that part of the total debt of a country that is owed to
creditors outside the country. The debtors can be the government, corporations or private
households (Abula M, Ben DM, Ozovehe AI, 2016).
The Concept of Domestic Debt
According to Ozurumba and Kanu (2014) domestic debts refer to the portion of a
country's debt borrowed from within the confines of the country. These loans are usually
obtained from the central bank of Nigeria, deposit money banks, discount houses and other
non-bank financial houses.
Domestic Debts are debts that originate from within the geographical region of a
country, which are contracted through debt instruments such as treasury bills, treasury
certificates and treasury bonds. Others are development stocks, FGN bonds and Promissory
notes (Matthew A, Mordecai DB, 2016).
The Concept of Pubic Debt Servicing
According to investopedia; this is the cash that is required to cover the repayment of
interest and principal on a debt for a particular period. If a country is taking out a mortgage,
the borrower needs to calculate the annual or monthly debt servic required on each loan. The
ability to service debt is what every government of a particular country should consider
before borrowing debts.

Empirical Literatures
Panagiotis (2018) empirically investigated the nexus between public debt and the
determinants of economic growth such as private and government consumptions, investment,
trade openness, and population growth in Greece through the applications of unit root tests,
and auto-regressive distributed lag (ARDL) model. The unit root tests indicated mixed

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integration of order zero and order one among the variables. The results of the ARDL model
revealed a long-run relationship between variables. It also showed that private and
government consumption, investment and trade openness had positive effects on economic
growth; while government debt and population growth had a negative impact on growth. The
study also addresses the break effects issue between government debt and economic growth.
The results indicated that the nexus between debt and growth depends on debt breaks.
Gitana, Agnė, and Aušra (2018) empirically investigated the impact of government
spending on economic growth in the European Union (EU) over the period 1995-2015.
Descriptive statistics analysis, correlation analysis, and Granger causality test was employed
in the analysis. The results indicated that government spending had a significant influence on
economic growth in eight EU countries.
Alejandro and Ileana (2017) examined the impact of government debt on gross
domestic product in 16 Latin American economies including Bolivia, Argentina, Chile,
Brazil, Costa Rica, Colombia, Dominican Republic, Mexico, Honduras, Panama, Nicaragua,
Peru, Paraguay, Venezuela and Uruguay for the period 1960- 2015 using Two-Stage Least
Squares (2-SLS) in the analysis. The variables employed in the analysis include the initial
level of GDP per capita, the growth rate of GDP per capita, gross government debt as a share
of GDP, investment rate proxied as gross fixed capital formation as a share to GDP and
population growth rate. The results indicated that debt has a positive impact on GDP growth
but declines to close to zero beyond public debt-to-GDP ratios between 64% and 71%; up to
this threshold, additional debt has a stimulating impact on growth.
Nassir and Wani (2016) investigated the relationship between public debt and
economic growth in Afghanistan for the period 2008-2012 using analysis of variance
(ANOVA). The variables employed in the study include the gross domestic product (GDP),
government stock, Advances from Commercial banks and external debt. The results showed
that government stock, Advances from Commercial banks and external debt have negative
and insignificant influence on the gross domestic product (GDP) in Afghanistan.
Isaac and Rosa (2016) examined the effect of public debt and public investments on
economic growth in Mexico for the period 1993-2012 using dynamic models of panel data
and the generalized method of moments in the analysis. The variables used in the study were
a nominal budget deficit, public income, public spending, the volume of interest paid, the
nominal effective rate of interest, and the total value of domestic public debt. The empirical
results showed that public debt has a positive influence on public investment and economic
growth in the economy.

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 Precious (2015) examined the effects of both public external and domestic debt on
economic growth in Swaziland for the period 1988-2013 by applying unit root test and
ordinary least square (OLS) approach. The variables used in the study were real gross
domestic product growth rate, external debt, domestic debt, government expenditure, and
inflation rate. The study discovered that external debt had insignificant influence on
economic growth in Swaziland, while domestic debt had a positive and significant impact on
economic growth.
Reza, Michael, and Mona (2014) investigated the nexus between savings and
economic growth in Iran over the period 1972-2010 with the application of the stationarity
test and autoregressive distributed lag (ARDL) model. The results of the stationarity test
indicate mixed order of integration; i.e. order zero and order one. The study showed that
savings had a positive and significant impact on total and non-oil economic growth. Both
types of economic growth were also found to have a positive and significant impact on
savings. Similarly, the results showed that long-run causality exists between savings and
economic growth, and between saving and non-oil economic growth, and hence, these
relations are bi-directional.
Lucky and Godday (2017) empirically examined the nexus between the public debts
structure and the growth performance of the Nigerian economy for the period 1990-2015
using simple and multiple regression analyses. The variables used in the analysis include
gross domestic product, domestic debt, external debt, and total debt. The results of the simple
regression total public debt have a positive and significant impact on gross domestic product
in Nigeria. Similarly, the results of the multiple regression analysis revealed that whereas the
external debt is negative and significant to economic growth, the domestic debt has a positive
and significant effect on the economic growth in Nigeria.
Elom-Obed, Odo, Elom, and Anoke (2017) carried out research on the nexus between
public debt and economic growth in Nigeria for the period 1980-2015 using cointegration
test, Vector Error Correction Model (VECM) and Granger causality test. The variables
employed in the investigation were the real gross domestic product, domestic private savings,
external debt, and domestic debt. The empirical results revealed that external debt and
domestic debt have negative and significant effects on economic growth in Nigeria.
Stephen and Obah (2017) analyzed the impact of national savings on economic
growth in Nigeria over the period 1990-2015 with the applications of descriptive statistics
analysis and Ordinary Least Square (OLS). The variables utilized in the investigation were
the gross domestic product (GDP) and national savings. The result indicated that national

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savings had a positive and significant impact on gross domestic product (economic growth)
in Nigeria.
Gap(s) in Literature
No unit root test was conducted in studies such as Gitana, Agnė, and Aušra (2018),
Lucky and Godday (2017), Elom-Obed, Odo, Elom, and Anoke (2017), and Stephen and
Obah (2017), this can lead to spurious regression.

Works such as Panagiotis (2018), Precious (2015) and Reza, Michael, and Mona
(2014) e.t.c were conducted with regards to other countries. This rearch work will focus in
Nigeria.
Different methods of estimation were used in studies such as G Alejandro and Ileana
(2017), Nassir and Wani (2016), and Isaac and Rosa (2016), while this research will use
Ordinary Least Square Regression technique.

METHODOLOGY

Research Design

The Expo Facto design was used because the study is a quasi-experimental study examining
how independent variables affect a dependent variable.

This study applies econometric procedure in estimating the impact of public debt and debt
servicing on economic growth in Nigeria. The Ordinary Least Square (OLS) technique is
employed in obtaining the numerical estimates of coefficients in different equations.

Theoretical framework

This study adopts the neo-classical growth theory as the theoretical framework guiding this
research work. The theory believed that an increase in the growth rate of output results from
increases in the factors of production and productivity that increases as a result of
technological change alongside the changes in organization and practices. Thus, an increase
in government expenditure could be justified if it results from a rise in education and health
services because they are assumed to be the most important investments in human capital. It
is against the backdrop that the neo-classical growth theory was adopted considering the fact
that public debt if borrowed to finance health, education, and development investments, it is

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referred as being productive, which can contribute positively to economic growth via
increased labor, capital, and technology.

Model Specification

The functional form of the model is specified as:

RGDP= f(PDS, EXR)

The econometric form of the model is specified as:

RGDPt = β0 + β1PDSt + β2EXR + µt

Where:

RGDP= Real Gross Domestic product

f = functional relationship

EXR= Exchange rate

PDS= public debt servicing

β 0= Constant

β1, β2 is the relative slope coefficient

µt = stochastic or error term

Method of Evaluation

The estimated result will be evaluated subject to the following tests:

 Preliminary Test
 Economic Test of Significance (A Priori Test)
 Statistical Test of Significance (First Order Test)

Econometric Test of Significance (Second Order Test)

Data Required and Sources

The data required for this study are secondary time series data on public debt
servicing, exchange rate and Real Gross Domestic Product (RGDP) ranging from 1980-2019.
The data are extracted from the 2021 editions of the Central Bank of Nigeria (CBN)
statistical bulletin.

Statistical Software Used

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This research work employs the 8th version of E-views (econometric views) in carrying out
its analysis.

PRESENTATION AND ANALYSES OF DATA

Unit Root Result
The unit root test was conducted on all the variables. Augmented Dickey Fuller (ADF) test
unit root test was employed for this purpose. The results of the tests are presented below
Unit Root Test Analyses Result
Variables ADF test 5% critical Order of
Statistics Value Integration
RGDP -6.618675 Second difference
-`1.950117
PDS -10.09758 -1.950117 Second difference

EXR -4.484465 -1.949856 First difference

Source: author’s computation using eviews, 8
From the unit root test result, real gross domestic product (RGDP) and public debt
servicing (PDS) are stationary at second difference while exchange rate (EXR) is stationary
at first difference. Judging from our decision rule since the ADF statistics is greater than the
5% level of significance in absolute. Since the entire variables are not stationary at level
form, there is a need to conduct a co-integration test to test for the long run relationship of the
variables.
Co-integration Test
The Augmented Dickey Fuller (ADF) test was utilized for this purpose, a unit root
test was conducted on the residuals. The results of the tests are presented below
Co-integration Analyses Result
Null Hypothesis: ECT has a unit root
Exogenous: None
Lag Length: 0 (Automatic - based on SIC, maxlag=9)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -5.995822 0.0000

Test critical values: 1% level -2.628961
5% level -1.950117
10% level -1.611339

*MacKinnon (1996) one-sided p-values.

Source: Author’s computation using eviews, 8

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From the result above, the ADF statistics is greater than the 5% level of significance in
absolute term 5.995822 is less than 1.950117. This reveal the rejection of the null hypotheses
at 5% level of significance based on the decision rule.
Evaluation of Regression/ECM Results
Dependent Variable: D(D(RGDP))
Method: Least Squares
Date: 05/23/21 Time: 09:29
Sample (adjusted): 1982 2019
Included observations: 38 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

C 216.7257 167.3339 1.295170 0.2037

D(D(PDS)) -0.733836 1.507176 -0.486894 0.6294
D(EXR) 18.56524 6.317167 2.938855 0.0058

R-squared 0.220710 Mean dependent var 38.18120

Adjusted R-squared 0.176180 S.D. dependent var 1067.216
S.E. of regression 968.6541 Akaike info criterion 16.66535
Sum squared resid 32840178 Schwarz criterion 16.79463
Log likelihood -313.6416 Hannan-Quinn criter. 16.71135
F-statistic 4.956349 Durbin-Watson stat 2.229095
Prob(F-statistic) 0.012727

Source: author’s computation using eviews, 8

In the regression result, the variables are real gross domestic product (RDGP) as the
dependent variable; public debt servicing (PDS) and exchange rate (EXR) are the
independent variables. From the result the estimated coefficient value of b0, b1 and b2 are
216.7257, -0.733836 and 18.56524. The constant term (b0) is estimated at 216.7257 which
mean that the model passes through the point 216.7257, if the independent variables are zero;
real gross domestic product would be 216.7257. The estimated coefficient for public debt
servicing (PDS) is -0.733836 this means that holding other variables constant, a unit increase
in public debt servicing (PDS) would lead to a 0.733836 decrease in real gross domestic
product. Also the estimated coefficient for exchange rate (EXR) is 18.56524 this means that
holding other variables constant, a unit increase in exchange rate (EXR) would lead to a
18.56524 increase in real gross domestic product.
Evaluation Based On Statistical Criterion
R2 –Result and Interpretation
The coefficient of determination R2 from the regression result, the R2 is given as 0.220710
this implies that 22.0710 % of the variation in real gross domestic product is caused by the
variations in public debt servicing (PDS) and exchange rate (EXR). This implies that over
75% of the variations in real gross domestic product is been explained by variations in other
macroeconomic variables besides the independent variables under consideration in this study.

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t–Test Result and Interpretation
N= 39 while k= 3 therefore, the degree of freedom is n-k = 39-3 = 36. From the distribution
table, t0.025,36 = 2.042
The result of the t-test is presented below and they are evaluated based on the critical value
(2.042) and the value of calculated t-statistics for each variable.
t-Test of Significance analyses result
VARIABLES t-computed (t*) t-tabulated (ta/2) Conclusion
PDS -0.486894 2.042 Insignificant
EXR -2.938855 2.042 Significant

Result and Interpretation of F–Test of Significance

The degree of freedom is given as V1=3-1=2, V2=39-3=36, d.f = (2, 36). At 5% level of
significance and df=(2,36) f0.05= 3.32 and F*=4.956346. Since f* is greater than f0.05, we
accept the alternative hypothesis and conclude that the variables public debt servicing (PDS)
and exchange rate (EXR) have joint impact on real gross domestic product. This implies that
the entire regression plain is significant.

Result and Interpretation of Normality Test

6
Series: Residuals
Sample 1983 2019
5 Observations 37

4 Mean 7.53e-14
Median 199.0206
Maximum 1999.083
3 Minimum -2257.532
Std. Dev. 881.6572
Skewness -0.543999
2
Kurtosis 3.359086

1 Jarque-Bera 2.023719
Probability 0.363542

0
-2500 -2000 -1500 -1000 -500 0 500 1000 1500 2000
Source: Authors computation using eview 8

From the normally test result, since the probability value is greater than 0.05 we conclude
that the residuals are normally distributed.

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Result and Interpretation of Granger Causality Test
Pairwise Granger Causality Tests
Date: 05/23/21 Time: 09:46
Sample: 1980 2019
Lags: 2

Null Hypothesis: Obs F-Statistic Prob.

PDS does not Granger Cause RGDP 38 0.09173 0.9126

RGDP does not Granger Cause PDS 2.52596 0.0953

EXR does not Granger Cause RGDP 38 2.09760 0.1388

RGDP does not Granger Cause EXR 4.26478 0.0225

EXR does not Granger Cause PDS 38 7.04937 0.0028

PDS does not Granger Cause EXR 1.30382 0.2851

Source: Authors computation using eview 8

From the Granger causality test result judging from the decision rule, there is zero causality
relationship between public debt servicing and economic growth in Nigeria.
Evaluation of Research Hypotheses
Hypothesis one- from the t-Test result we accept the null hypothesis which states that public
debt servicing has no significant impact on economic growth in Nigeria.
Hypothesis two- from the granger causality test result, we accept the null hypothesis which
states that there is no causality relationship between public debt serving and economic growth
in Nigeria.

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

Summary of Findings
The research result from the analyses indicates that public debt servicing has no significant
impact on economic growth in Nigeria and thus insignificant variable in determining
economic growth in Nigeria. The result also shows that public debt servicing has negative
relationship with economic growth in Nigeria. The granger causality test result also shows
that there is no causality relationship between public debt servicing and economic growth in
Nigeria.
Conclusion
Public debt servicing has no significant impact on economic growth in Nigeria and thus
insignificant variable in determining economic growth in Nigeria. Public debt servicing has
negative relationship with economic growth in Nigeria. There is no causality relationship
between public debt servicing and economic growth in Nigeria.

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Recommendations
In view of the results of this study, the following recommendations are made;
1. There is a need for the government to seek the diversification of the economy away
from oil as this will generate more revenue which will reduce the effect of a
downtrend in oil revenue which usually calls for debt.
2. The government must ensure productive use of debt when contracted although this
may require considerable fiscal discipline and there is also the need for accountability
in governance, good macroeconomic policy environment and enhanced exportation of
domestic products.
3. The cost of governance should be reduced so as to enable proper utilization of the
available funds for development purposes and an enabling environment must be
created to enhance investment in the Nigerian economy.

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