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An Empirical Analysis of the Impact of Public Debt Management Strategies on Nigeria's Debt Profile

Author

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  • Abdulkadir Abdulrashid Rafindadi

    (Department of Accounting, Faculty of Management Sciences, Usmanu Danfodiyo University, Sokoto, Nigeria.)

  • Abdulazeez Musa

    (Department of Accounting, Faculty of Management Sciences, Usmanu Danfodiyo University, Sokoto, Nigeria.)

Abstract

This study examined the impact of debt management strategies on the Nigeria's public debt profile. Specifically, the study evaluates the impact of debt refinancing, and measure the impacts of debt forgiveness and debt conversion scheme on the public debt profile of Nigeria. To ensure robust result is achieved, time series data from World Development Index (WDI), Central Bank of Nigeria (CBN) and Debt Management office were used. The study applied the ARDL econometric methodology in order to investigate the long-run and the short run dynamics of total debt profile of the country on debt refinancing (DRF) debt forgiveness (DF) and Debt Conversion Scheme (DCV). The findings of the study reveal that debt refinancing has negative impact on total debt profile in Nigeria. In addition to that, debt forgiveness was detected to have significant negative impact on the debt profile of the country. While, Debt Conversion on its part was found to be having significant effect on the Nigeria's debt profile. The implications of these findings is that whenever, the debt profile of the country is not streamlined with the tenets of economic development and fiscal policies of the country, then it is obvious that any persistent and sustained rise in exchange rate, devaluation and or fall in the country's external reserve will add to existing economic hardship of the country, particularly when greeted by a fall in the international market prices of petroleum. These developments can overheat the economy, retard internal plans for economic expansion and cause significant derelictions of already attained economic growth. The researchers thereby, recommend that government should strengthen debt refinancing in order to reduce debt profile of the country, seek for debt forgiveness and provide more instruments for debt conversion with a view to drastically reduce the Nigeria's national debt profile following its observed long run effect to the country's economic wellbeing.

Suggested Citation

  • Abdulkadir Abdulrashid Rafindadi & Abdulazeez Musa, 2019. "An Empirical Analysis of the Impact of Public Debt Management Strategies on Nigeria's Debt Profile," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 125-137.
    • Handle: RePEc:eco:journ1:2019-02-16
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    References listed on IDEAS

    as
    1. Abdulkadir Abdulrashid Rafindadi & Zarinah Yusof, 2014. "Are the Periods of Currency Collapse an Impediment to Entrepreneurship and Entrepreneurial Haven? Evidence from Regional Comparison," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 886-908.
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    5. Abdulkadir Abdulrashid Rafindadi & Zarinah Yusof, 2014. "An Econometric Estimation and Prediction of the Effects of Nominal Devaluation on Real Devaluation: Does the Marshal-Lerner (M-L) Assumptions Fits in Nigeria?," International Journal of Economics and Financial Issues, Econjournals, vol. 4(4), pages 819-835.
    6. Togo, Eriko, 2007. "Coordinating public debt management with fiscal and monetary policies : an analytical framework," Policy Research Working Paper Series 4369, The World Bank.
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    8. Weist, Dana & Togo, Eriko & Prasad, Abha, 2010. "Crisis preparedness and debt management in low income countries : strengthening institutions and policy frameworks," Policy Research Working Paper Series 5372, The World Bank.
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    10. Maureen Were, 2001. "The Impact of External Debt on Economic Growth in Kenya: An Empirical Assessment," WIDER Working Paper Series DP2001-116, World Institute for Development Economic Research (UNU-WIDER).
    11. Abdulkadir Abdulrashid Rafindadi, 2015. "Are the Contentious Issues of Exchange Rate Misalignment in Nigeria a Prelude to the Country's Currency Crisis?," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 716-731.
    12. Abdulkadir Abdulrashid Rafindadi & Zarinah Yusof, 2015. "Are Linear and Nonlinear Exchange Rate Exposures Aggravating Agents to Corporate Bankruptcy in Nigeria? New Evidence from the U Test Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 212-229.
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    Cited by:

    1. Nzeh, Innocent Chile, 2020. "Public Debt and Economic Growth in Nigeria: Investigating the Optimal Threshold Level," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(2), pages 112-127, June.

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    More about this item

    Keywords

    Debt Refinancing; Debt Forgiveness; Debt Conversion; Total Debt;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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