Public Debt Management and Macroeconomic Stability in Nigeria

This study investigated the impact of public debt management specifically external and domestic debt on macroeconomic stability in Nigeria, using inflation rate and exchange rate stability as key indicators. Despite sustained borrowing to finance budget deficits and drive development, Nigeria continues to face rising inflation and exchange rate volatility, raising questions about the effectiveness of its debt strategy. Utilizing annual time-series data from 2000 to 2024 and applying the Autoregressive Distributed Lag (ARDL) model, the study assessed both the short-run and long-run effects of disaggregated public debt components on macroeconomic outcomes. The findings revealed that domestic debt significantly influences inflation in the short run, while external debt exerts a strong negative effect on exchange rate stability. These results underscored the differential impacts of debt composition and highlight the need for prudent and targeted debt management. The study further recommended aligning borrowing strategies with productive investments, adopting concessional external financing, and strengthening domestic revenue mobilization to ensure sustainable macroeconomic stability.