Assessment of Nigeria's domestic debt sustainability

Authors

S.C. Rapu

Publisher

Central Bank of Nigeria

Keywords

Domestic debt sustainability, External debt, Government expenditure, Domestic debt stock, Nigeria

Abstract

This paper attempts to measure the sustainable domestic debt stock level of the Federal Government of Nigeria over a period of time. This is necessary, considering the growing proportion of the cost of domestic debt service in Federal Government total expenditure. The paper addresses definitional issues about domestic debt and domestic debt sustainability relative to national output as well as the necessary policy implications. It also examined the causes, size and growth, sources and structure. Using the budget constraint model relative to GDP, the paper concludes that under the current fiscal stance of primary deficit, the Federal Government domestic debt is not sustainable. In order to achieve sustainability of domestic debt, the paper emphasized the need for the Federal Government to achieve primary surpluses of not below 0.9 percent in the next five years, as well as improvement in the growth rate of the economy, fiscal reforms and a more efficient domestic debt management through domestic debt restructuring.

Author Bio

Mr. S. C. Rapu is an Assistant Director, Research Department, Central Bank of Nigeria, Abuja.

Publication Title

CBN Economic and Financial Review (EFR)

Issue

2

Volume

42

Recommended Citation

Rapu, S.C. (2003). Assessment of Nigeria's domestic debt sustainability. Economic and Financial Review, 42(2), 41-66.