The Implication of Deficit Financing on Economic Recovery of Nigeria

AFRAG060

The Implication of Deficit Financing on Economic Recovery of Nigeria Emmanuel Isaac John, PhD

Department of Accounting and Finance Arthur Jarvis University, Akpabuyo, Cross River State, Nigeria

E-mail: johnemmanuel904@gmail.com

Abstract

The study analysed the effect of deficit financing on economic recovery of Nigeria using annual time series data covering 1986 2020. Autoregressive Distributed Lag Model (ARDL) was the technique of analysis employed. The results of the study revealed that deficit financing, measured with domestic debt, external debt and debt servicing, has no significant effect on economic recovery of Nigeria as measured with gross domestic product growth rate (GDPGR). Thus, the paper recommended, among others, that the federal government of Nigeria should desist from incurring more debt (both domestic and external), rather, internally generated revenue should be prudently used to execute productive projects to enhance economic recovery. Also, the existing debt stock should be managed properly for the betterment of the economy.

Keywords: Deficit Financing, Economic Recovery, Nigeria

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