External Debt Management and Macroeconomic Variables Performance in Nigeria

The study focused on the relationship between external debt management and basic macroeconomic variables performance in Nigeria. The variables for the study span the period 1986-2018 where external debt is the dependent variable while balance of payment, inflation, unemployment exchange rate, and real gross domestic product as independent variables. The study employs cointegration and Vector Error Correction Mechanism (VECM) methods. The findings revealed that balance of payment, inflation, and unemployment were the most important determinants of external debt in the long run in Nigeria. The study concluded with empirical evidence that trends in macroeconomic variables can be used to predict the movement of external debt to a great extent in Nigeria. The study therefore recommended that external borrowing should not be used for purposes that could deflate the economy but should be channeled towards the provision of goods that would increase the level of economic activities.