Table of Contents
Economics Research International
Volume 2016 (2016), Article ID 1957017, 7 pages
Research Article

Public Debt and External Reserve: The Nigerian Experience (1981–2013)

1Covenant University, Ota, Nigeria
2Federal University of Ilorin, Kwara State, Nigeria

Received 9 July 2016; Revised 22 August 2016; Accepted 30 August 2016

Academic Editor: Donald Lien

Copyright © 2016 Victoria Senibi et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.


Nigeria is confronted with the issue of limited capital and has to resort to foreign debt in order to augment domestic savings, balance of payment deficits, and shortfall in revenue which induce continuous raise in the debt stock at an alarming rate. In the light of this, this study assesses the impact of public debt on external reserve in Nigeria. The objectives of this study include the assessment of the trends and relationship between public debt and external reserve in Nigeria, using the Johansen cointegration and FMOLS technique on the secondary data from 1981 to 2013. The result revealed that public debt has a positive and significant effect on external reserve stock in the long run suggesting that the nation’s debt crisis can be attributed to both exogenous and endogenous factors such as the nature of the economy, economic policies, high dependence on oil, and swindling foreign exchange receipt. This study recommends that the federal government should employ more superior method to negotiate for fixed interest payment and varying amortization schemes, as well as seek multiyear rescheduling rather than year by year basis.