Department of Economics

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Macroeconomic Determinants of External Debts Burden in Nigeria (1970-2004)
(International Journal of Social Sciences, 2010) Saibu, O.M.; Abogan, P.O.
The study examined the macroeconomic determinants of external debt burden in Nigeria, with a view to investigating whether macroeconomic variables such as export, exchange rate, inflation and foreign interest rate were major determinant of external debt burden in Nigeria. The study used annual time series data from 1970 to 2004 and specified an Error Correction Model (ECM) to analyze the main determinants external debt burden and to draw policy inferences. The stationary and cointegration properties of the variables were also examined. In this way, a provision was made to correct for the spurious inferences that may likely occur if the variables used in the study were not stationary or cointegrated at levels. The empirical results showed that external debt service payment was positively determined by existing external debt stock, negatively by export and exchange rate while total external debt stock was affected positively by fiscal deficit, level of economic growth and inflation. The study concluded that the external debt burden in Nigeria depend significantly on the fluctuations in export growth, real exchange rate, fiscal deficit, inflation and level of economic activity.