– Domestic Debt Management and Economic Growth in Nigeria –
ABSTRACT
The study sought to investigate the impact of disaggregated domestic debt instruments on economic growth of Nigerian.
The Augmented Dickey Fuller Test, Multiple linear regression method and granger causality test was applied to annual Nigerian data spanning 1981-2015.
The study indicated that treasury bills have a positive relationship and significant impact on economic growth while treasury bonds have a positive relationship and insignificant impact on economic growth. Development stock has a negative relationship and insignificant impact on economic growth.
The control variables lending interest rate, inflationary pressure measured by consumer price index and exchange rate all have a negative relationship and insignificant impact on GDP except exchange rate. Money supply has a positive relationship and significant impact on economic growth.
INTRODUCTION
Internal debt or domestic debt is part of total government debt owed to lenders within a country (Reinhart and Rogoff, 2010). Internal debt is a compliment to external debt in government debt profile.
Commercial banks and other financial institutions constitute the sources of funds for the internal debts. Debts are classified into two that is reproductive debts and dead weight debt.
When a loan is obtained to enable the state or nation to purchase some assets, the debt is said to be reproductive e.g. money borrowed for acquiring factories, electricity, refineries etc.
However, debts undertaken to finance wars and expenses on current expenditure are dead weight debts.
Atuma (2016), argued that a nations rising debt profile and depleting foreign reserve ought to make all levels of government in the country to be more prudent in the management of their domestic and external loans.
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