Abstract

The necessity for governments to borrow in order to finance a deficit budget has led to the development of external debt. This study examined the impact of external borrowing on Nigeria’s economy between 1980 and 2015. By synthesizing a relationship between external borrowing and the economy the study shows that an increase in external borrowing results to an increase in the economy. The results of the econometric analysis confirm the existence of a positive relationship between external borrowing and economic in Nigeria. The hypothesis further confirms that there is a causal relationship between external borrowing and economic development in Nigeria. The study concludes that external borrowing has positive impact on the economy of Nigeria between the years under review. Based on the findings of the study, it is recommended that government should endeavour to reduce its external borrowing so as to reduce the burden that might be unleashed on tax- payers in terms of higher taxes in the future, and also on future generation, though it was observed from the study that external borrowing impacts positively on economic growth in the country.