ABSTRACT
Nigeria's public debt has risen significantly, reaching 43.6% of GDP in 2023, posing a threat to economic stability and growth. Excessive debt can also lead to a debt trap, making it difficult for the government to repay its obligations and causing economic stagnation. Understanding the relationship between public debt and economic growth is crucial for effective debt management strategies and to promote sustainable economic development. Thus, this study examined the impact of public debt on economic growth in Nigeria from 2000 to 2022, applying Keynesian theory. The study employed the ADF test, co-integration test, and OLS regression to assess the impact of external and domestic debt, government expenditure, and exchange rate on GDP. The findings revealed significant variability in the distributions of the variables, non-stationarity in their level form, and multiple cointegrating relationships among them. The OLS regression analysis showed that Domestic Debt has a significant positive impact on economic growth, while External Debt has a significant negative effect. The study recommended creating policies for efficient use of borrowed funds, ensuring data reliability, prioritizing expenditures in infrastructure, innovation, and human resources, and promoting private sector investment and economic diversification. Keywords: Domestic debt, Exchange rate, External debt, GDP, Government expenditure.
