MULTIVARIATE ANALYSIS OF THE DETERMINANTS OF PUBLIC EXTERNAL DEBT IN NIGERIA

Abstract

Available literature and published studies in Nigeria identified the role of public external debt in financing her economic development. The studies also identified the macro economic variables which were critical in public external debt management in Nigeria. Unfortunately however, the studies failed to empirically and statistically determine the variables which were central in public external debt management. Interestingly, empirically and statistically determining the impacts of selected critical macroeconomic variables on external debt in Nigeria, during the period 1970-2016, is the core of this study. Underpinned by the range of dependency theories, with preference for Andre Gunder Frank’s typology and position, the study adopted the ordinary least squares analytical approach in regressing the annual data of the selected macroeconomic determinants, namely interest rate, inflation rate, exchange rate, external reserves, aggregate government capital expenditure and gross domestic product, on the dependent external debt, using the E-Views processor. The results of the hypothesis tested showed differing levels of statistical significance between public external debt and the determinants during the period. Based on the findings, it is recommended that, among others Government should conduct external borrowing with diligence and professionalism instead of the extant naive practice.