POVERTY AND PUBLIC DEBT: THE NIGERIA EXPERIENCE

Abstract

This study examined the effect of public debt on poverty level in Nigeria from 1998 to 2022. A single equation model was developed for the study. The variables, whose data came from various secondary sources, include Gross Government Debt (GD) as a percentage of GDP, Debt Service (DS) as a percentage of GDP, Gross Saving (GS) as a percentage of GDP, and Poverty, proxied by final consumption expenditure of households and profit institutions serving households (PFC). Using the Phillips Perron unit root test procedure, no variable was found to be stationary at a level beyond the first difference. This recommended the use of the Auto regressive distributed lag model (ARDL) method for the analysis. The result showed that public debt as well as inflation rate had escalatory and significant impacts on poverty in Nigeria. It was recommended that since countries, especially poor ones, can hardly grow and develop without borrowing, the nation should not be discouraged from borrowing. However, an effective system which entails public disclosure should be put in place to block possible wastages which may arise in the course of implementation and use of such funds.