AN ANALYSIS OF EXTERNAL DEBT AND ECONOMIC GROWTH IN NIGERIA, (1992 – 2004). A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
ABSTRACT
External borrowing is a source through which many countries source revenue for development and economic growth of their countries. But this revenue can only help solve the problems of gross under – development when judiciously utilized.
The burden of Nigeria’s external debt is more than the country can bear and the state of economic growth in the country is hampered due to debt crisis.
The debt problem facing Nigeria is concerned on how to stop incurring more debts and device a way of servicing the existing debt without causing some distortions in the economy. For effective and efficient debt servicing, factors that hiders it has to be taken care of i.e. domestic financing policies, debt management and external economic environment.
External debt affects the economic growth, the level of money supply and employment in the country. So, Nigeria can solicit for debt cancellation from it’s creditors and also adopt debt management as pat of it’s macro economic policies of the nation and finally engage in productive projects.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
Every country in the world aim at achieving economic growth and development. However, this is only possible if a country has adequate resources. In developing countries, especially those in sub Sahara Africa, the resources to finance the optimal level of economic growth and development are in short supply. This is as a result of the economies ploughed with problems of low domestic savings, low tax revenues, low productivity and meager foreign exchange earnings.
Basically, for these reasons, many developing countries yearning for economic growth inevitably resort to external financing to bridge the gap between their savings and investments. In the process of obtaining finance from abroad, a country may consider several options: grants, foreign investment and loans (concessional and non – concessional) in that order. However, mix of these capital in – flow in varying proportion could be obtained depending on the socio – economic and political situation in a country.
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