(Department of Banking and Finance, Faculty Of Administration Nasarawa State University, Keffi., 2019-03-18) Saleh, Atiku Dambatta; Udenwa, Theresa A
This study examines the effect of budget deficit and public debt servicing on domestic debt stock in
Nigeria. An ex-post facto research design was employed for this study. Secondary data were collected
from Central Bank of Nigeria Statistical Bulletin for thirty eight year period spanning through 1981 to
2018. Employing the econometric methodology of the Johansen Cointegration and Vector Error
Correction Model, the study established long run relationships among the variables. The Ordinary
Least Square result shows that budget deficit has no significant effect on domestic debt stock in
Nigeria, while domestic debt servicing have significant effect on domestic debt stock in Nigeria. The
study recommends that the Debt Management Office should take urgent steps towards restructuring
part of the short term domestic debt to long term through outright redemption of portion of short term
domestic debt when they mature. Also, to reduce the possibility of crowding-out the private sector, the
Federal Government should encourage private sector participation in developmental projects through
the issuance of Federal Government guarantee.