Effect of public debt management on budget implementation performance: evidence from selected states in Nigeria

Abstract

Purpose: This study investigated the effect of public debt management on budget implementation performance in Nigerian states. Specifically, the study analysed the effect of the domestic debt management ratio and the external debt management ratio on the budget implementation performance of selected states in Nigeria.

Methodology: The study captured a total of 18 states randomly selected across the 6 geopolitical zones of Nigeria. Panel-based data were collected across the 18 states over a period of 10 years spanning from 2014 to 2023. Data collated were analysed using correlation estimation, panel pooled OLS estimation, and fixed effect estimation.

Results and conclusion: Results revealed that the domestic debt management ratio exerts an insignificant negative effect on the budget implementation performance of states in Nigeria. (-0.0292211, p > 0.05). The external debt management ratio, on the other hand, exerts a positive insignificant effect on budget implementation performance (0.0609831, p > 0.05). This study concludes that domestic debt management has an insignificant tendency to impede budget implementation performance among states in Nigeria, just as external debt management has an insignificant likelihood to improve budget implementation, though it does not pose any negative threat. Hence, this study recommends, among others, that state governments should ensure efficient and effective domestic and external debt management systems that create a minimal level of debt relative to total revenue for efficient and effective budget implementation.

Implication of findings: The findings of this study suggest that state governments in Nigeria should take necessary steps to manage their domestic and external debt profiles to enhance their capacities for effective budget implementation.