THE IMPACT OF EXTERNAL DEBT ON NIGERIA ECONOMY (1985-2011)

ABSTRACT

This work evolved out of the zeal to provide an immense understanding of the Nigeria economic of debt. The broad objective of this study was to evaluate the impact of external debt on the development of the Nigeria economy within the lifespan of 19852011.The models in this study was used to evaluate the developmental relationship between the independent variables and the dependent variables. The data were sourced from the Federal office of statistics, CBN statistical bulletin 2011, and international monetary fund IMF. The ordinary least square method OLS was employed in the cause of study. Also, the Augmented Dickey Fuller test ADF revealed that the variables are reliable for forecasting while the use of OLS was most appropriate for the study in terms of goodness of fit and significance of regression coefficient. The outcome of the analysis revealed that increase in external debt positively affects the economic development of Nigeria while increase in external debt services positively affects economic development in Nigeria. Thus; conclusion was made that external debt rises rapidly because loans were secured for dubious projects and private pockets rather investing the loan in productive ventures by increasing exports. And by recommendation, government should incur external fund for developmental projects and as well monitor effectively the use of external funds so as to ensure the development of Nigeria economy.