Government Expenditure and Public Debt in Nigeria

Ph D Blessing Ose Oligbi
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Ph D Blessing Ose Oligbi: Department of Economics, Igbinedion University, Okada, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 6, 129-141

Abstract: The study empirically examines the relationship between public debt and government expenditure in Nigeria from 1981 to 2022. The data which is purely secondary data was obtained from CBN statistical bulletin and world development indicators, 2022. The statistical tools used include, the Augmented dickey fuller (ADF) unit root test, auto regressive distributed lags (ARDL) bound testing approach to cointegration, and the error correction methodologies. The empirical findings revealed that government expenditure (both recurrent and capital), as well as interest rate has a direct positive effect on the total debt stock while total government revenue has a reverse effect on the total debt stock in Nigeria. This shows that all the variables conform to a-priori expectations, significant in the short-run, but statistically insignificant in the long-run. This outcome implies that public debt through government expenditure is a good macroeconomic policy, but more share of government recurrent expenditure, as found in this study, jeopardizes the policy objectives. The study therefore recommends a prudent budgeting approach, a reduction in recurrent expenditure in favour of capital expenditure, diversification of the economy to generate more income sources and revenue and finally, prudent public debt management strategies and efficient government expenditure management frameworks to provide fiscal and debt sustainability and enhance the growth process in Nigeria.

Date: 2024
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