THE NATIONAL EFFECTS OF EXCHANGE RATE CHANGES ON FOREIGN DEBT SERVICE IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
This Project is on the national effects of Exchange Rate changes on foreign debt services on Nigeria. It run over a time series of nine years and examines how fluctuations on exchange rate has made it difficult for the country’s debt services.
The method use in dreaming these affects is the ordinary least square method of regression Technique. The work shows critically the effects of exchange rate changes on debt services in Nigeria. Through the method used above, the reason for the increase in external debt over the years was discovered. Among them were fared imbalances, fund of Projects that are not feasible, fund of Projects that are not feasible et.
At the end, these factors were analyzed using the ordinary least square (OLS) regressing techniques whereby a linear model was formulated to analyze individual influences of exchange rate changes on some variables such as the debts service payment etc.
After these studies, the researcher recommends that a committee be set up to check excessive borrowings and ensure that borrowed funds are used for projects that initiated the borrowing only investments (project) that are capable of yielding more fund to the government should be pursed.
Also, the improve debt services in the country.
The amount of borrowing form outside country should be reduced and the government should learn to use its own resources i.e. borrow from wealthy individuals and private organs within the country.
1.1 BACKGROUND OF THE STUDY
By the year 1970’s and early 1980’s external debt obligation of Nigeria was very significant, but assumed crisis and disagreement in the late 1990’s.
However, external debt or internal debt obligations results from disagreements between the Fiscal operations of the government when the total expenditure exceeds current revenue for a govern fiscal year. Whenever a county witnesses a budgetary gap, the nation can employ domestic or external borrowing to breach the budgetary gap.
Borrowing from external sources by the government constituted the external debt of the public sector and the government owned the obligation of debt servings through series of periodic repayment of interest and capital repayment of the debt.
From the proportion of the gross domestic product (GDP), the external debt outstanding rose, from and average of 7.5 between 1971 and1985 to 91.6 between 1986 and 1994 and it has continues to rise by heaps and bounds every year. The foreign exchange market to ensure