External Debt Servicing, External Reserves and Economic Growth in Nigeria

The study examined the relationship between External Debt Servicing, External Reserves and
Economic Growth in Nigeria. The study adopted Ex-post facto research design. Secondary
data was used in the study, and empirical investigation was carried out on the sample size
covering the period of 15 years (2008-2022) and real GDP was used as an indicator of
economic growth, while external debt service payment and external debt stock were also used
as indicator of public borrowing. The study employed multiple regression analysis using
Statistical Package for Social Sciences (SPSS 26) to examine the relationships between the
dependent and independent variables. Finding indicated that there is no significant
relationship between external debt stocks and Gross Domestic Product (GDP) in Nigeria;
there is no significant relationship between external debt service payment and Gross Domestic
Product (GDP) in Nigeria; there is no significant relationship between External reserves to
debt ratio and Gross Domestic Product (GDP) in Nigeria and there is no significant
relationship between debt services to revenue ratio and Gross Domestic Product (GDP) in
Nigeria. It was recommended that Nigeria’s foreign loans should be ventured into capital
projects that will improve the economy, by fighting corruption, adopting better and flexible
strategies of trade and exchange rate (monetary) policies and that foreign borrowings for
capital expansion and investment must be balanced against the interest cost and sustainability
effects of the debt.