ABSTRACT

The study evaluates the effect of external debt burden on the Nigerian economy since  (1996-2005 Debt is an important resource needed to Support, sustainable economic growth. But a huge external debt)t without servicing , as was the case for Nigeria before year 2000 constituted a major impediment to the revitalization of' her shattered CCOflOifl as well as the alleviation of debilitating poverty. 'the much needed inflow of foreign resources for investment stimulation, growth and employment were hampered. 'the objectives of the study iiìcl tide, evaluating the structure and trend of Nigeria's external debt, to determine the impact of external debt on the Nigerian economy, to identify the external debt management strategies used in Nigeria, to determine the efftctivcness of the strategies adopted. and to make recommendations on the ways to manage the cxtchial dehts of' the nati)n. Secondary data were used and were analyzed by the use econometric appr ach. 'I'imc series (lala werc cot lcctc(l on oiltstan(hine external debt. Gross i)oniestic Pi oducts and other relevant variables. the regression result showed that, availability of' access to external flnance strongly influences the ccononiic development process of' any nation. Econometric model was used to analyze, the relationship between Gross Domestic Product and external debt, and GI'OSS 1)oniestic Product and its determinants. lhc I egi essiemi result evealed tl iat ct med dcl t iinj etctcd negatively efThcl on the N igeriami ceomiomny even at 1 % probability level. I ruin (lie above findings it Was reeonuiiendcd that debt could only be productive if' well managed SO as to make the rate ol' return higher than the cost of debt servicing. External finance should be used only for pmojects of' highest priority', to achieve a long-term solution to the external debt problem there must be vigorous promotion of' the nations export trade and drastic reduction in her merchandizc imports, with proper management, the government should ensure that the money saved from debt cancellation is invested in changing the lives of' millions (>1 people in Nigeria by providing more educational and health facilities.