THE IMPACT OF EXTERNAL DEBT AND ITS SERVICING ON NIGERIA ECONOMIC GROWTH

This paper reviewed the impact of external debt and its servicing on sustainable economic growth and development with particular emphasis on Nigeria. Information was generated extensively from secondary data. The data collected was analysed using ordinary least square regression. The results show that there is a weak positive relationship between external debt and economic growth in the case of Nigeria. Availability of access to external finance strongly influences the economic development process of any nation. Debt is an important resources needed to support sustainable economic growth. But a huge external debt without servicing as it is the case for Nigeria before year2000 constituted a major impediment to the revitalization of her shattered economy as well as the alleviation of debilitating poverty. Failure of any owing country to service her debt obligation results in repudiation risk preventing such to obtain new loans since little or no confidence will be placed on the ability to repay. It will also undermine the effort to obtain substantive debt relief over the medium term with a tremendous increase in interest, arrears and other penalties. Debt can only be productive if well managed so as to make the rate of return higher than the cost of debt servicing. The study therefore recommends the vigorous promotion of the nations export trade and drastic reduction in her merchandize imports