A DISAGGREGATED ANALYSIS OF THE EFFECT OF DOMESTIC PUBLIC DEBT ON ECONOMIC GROWTH IN NIGERIA

ABSTRACT The study examines the relationship between disaggregated domestic public debt and economic growth in Nigeria for the period 2007Q1 to 2020Q2. Secondary data is obtained from the Central Bank of Nigeria Statistical Bulletin and Debt Management Office Quarterly Domestic Debt Reports as well as National Bureau of Statistics Quarterly Reports. The study uses Gross Domestic Product (GDP) as the dependent variable to measure the Nigerian economic growth; whereas, banking sector debt, non-bank public debt and Central Bank of Nigeria debt - ways and means advances as the independent variables. Three hypotheses were tested using time series econometrics models. The result reveals that there is a long-run equilibrium relationship between banking sector debt, non-bank public debt, Central Bank of Nigeria debt - ways and means public debt have statistically positive significant effect on economic growth, the Central Bank of Nigeria debt - ways and means advances has a negative but significant effect on growth in Nigeria. Thus, the study recommends that that the Government should give more priority to banking sector and non-bank public debt in funding budget deficit and that borrowing from the CBN by the Government should be restricted to refinancing of maturities only.