Exploring the Impact of Public Debt Management on Economic Stability in Nigeria
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Background of the Study
Public debt management plays a pivotal role in ensuring economic stability by balancing borrowing needs with fiscal sustainability. In Nigeria, managing public debt has become increasingly critical between 2023 and 2025, as the government has sought to finance developmental projects while mitigating risks associated with high debt levels (Ogunleye, 2023). The theoretical framework suggests that sound debt management reduces borrowing costs and stabilizes macroeconomic conditions by maintaining investor confidence. Empirical studies indicate that efficient debt management—through strategies such as debt restructuring, diversified borrowing sources, and improved transparency—can mitigate the negative effects of public debt on economic performance (Adebayo, 2024). However, persistent challenges such as poor revenue collection, political interference, and global market volatility complicate these efforts. This study examines the link between public debt management and economic stability in Nigeria, exploring how effective debt strategies can create a more predictable fiscal environment and promote sustainable growth (Chinwe, 2025).
Statement of the Problem
Despite various debt management reforms, Nigeria continues to face challenges related to fiscal instability and high public debt. Inefficient debt management practices, including unsustainable borrowing and poor utilization of funds, have led to rising debt servicing costs and fiscal deficits (Ibrahim, 2024). These problems are compounded by external shocks such as fluctuating global interest rates and oil price volatility, which further strain the national economy. The current debt management framework often falls short in balancing the need for financing with long-term fiscal sustainability, resulting in an environment of economic uncertainty. This study seeks to analyze the extent to which public debt management practices affect economic stability and to identify the key factors that hinder effective debt management in Nigeria (Nwankwo, 2023).
Objectives of the Study
- To evaluate the impact of public debt management on economic stability in Nigeria.
- To identify the key challenges affecting effective debt management.
- To propose policy measures to improve debt sustainability and fiscal stability.
Research Questions
- How does public debt management influence economic stability in Nigeria?
- What are the main challenges in implementing effective debt management strategies?
- Which policy interventions can enhance debt sustainability and stabilize the economy?
Research Hypotheses
- H1: Effective public debt management positively contributes to economic stability.
- H2: Inadequate debt management practices exacerbate fiscal imbalances.
- H3: Improved transparency and diversified borrowing reduce economic volatility.
Scope and Limitations of the Study
This study examines public debt management practices in Nigeria from 2023 to 2025 using government financial data, international debt reports, and economic surveys. Limitations include external economic shocks and difficulties isolating debt management effects from other fiscal policies.
Definitions of Terms
– Public Debt Management: The strategies and practices used to handle government borrowing and debt repayment.
– Economic Stability: The condition of steady growth with low inflation and sustainable fiscal policies.
– Debt Servicing: The repayment of principal and interest on public debt.
– Fiscal Sustainability: The ability of a government to sustain its current borrowing levels without compromising economic growth.
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