Effect of public debt management on budget implementation performance: evidence from selected states in Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i1.291.90-103Keywords:
Budget implementation, Domestic debt, External debt, Nigeria, Public debt managementAbstract
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.
References
Adegboyega, R. R. (2021). Debt Service Payments and Economic Growth in Nigeria. Journal of Business, 10(2), 7-22. DOI: https://doi.org/10.31578/job.v10i2.190
Adegoroye, A.A. (2018). The effect of public debt on budget performance in Osun state, Nigeria. Advances in Social Sciences Research Journal, 5(7), 452-464.
Ajayi, I.E. & Edewusi, D.G. (2020). Effect of public debt on economic growth of Nigeria: an empirical investigation. International Journal of Business and Management Review, 8(1), 18-38. DOI: https://doi.org/10.37745/ijbmr.vol8.no1p18-38.2020
Ajayi, J.M., Fali, I.M., Iganus, R.B. and Simon, U. (2021). Alternative sources of internally generated revenue and its usefulness to the finance and development of University of Maiduguri, Nigeria. Gusau International Journal of Management and Social Science, 4(1), 30-45
Akinwunmi, A.A. and Adekoya, R.B. (2018). Assessment of the Impact of External Borrowing on the Economic Growth of the Developing Countries - Nigerian Experience, Asian Business Research, 3(1): 29-39. DOI: https://doi.org/10.20849/abr.v3i1.331
Al-Zeaud, H.A. (2014). Public debt and economic growth: an empirical assessment. European Scientific Journal, 10(4), 148-158.
Amani, A.A. (2018). The impact of government debt on macroeconomic indicators: evidence from G7 and ASEAN countries. (Master Thesis) Eastern Illinois University.
Arit, E. N., (2013). Exploring the nexus between external debt management and economic growth.International Journal of Economics Research, 4(2), 43-65
Arnone, M., Bandiera, L., & Presbitero, A. F. (2005). External Debt Sustainability: Theory and Empirical Evidence. Retrieved from http://econwpa.repec.org/eps/if/papers/0512/0512007.pdf
Arogundade, K.K. & Olaoye, F.O. (2016). Impact of state revenue and expenditure on government budget performance in Southwest Nigeria. IOSR Journal of Business and Management, 18(4), 21-29.
Bigio, S., Nuño, G. & Passador, J. (2019). A Framework for Debt- Maturity Management. 1 – 91.
Biondi, Y. & Boisseau- Sierra, M. (2018). Financial Sustainability and Public Debt Management in Central Government.Palgrave Macmillan Pub.Forthcoming.1 – 21. DOI: https://doi.org/10.1007/978-3-319-57962-7_7
Churchman, N. (2001), David Ricardo on public debt, Palgrave. Available online @ www.ebook3000.com DOI: https://doi.org/10.1057/9780230509016
Edogbanya, A. & Ja’faru, G.S. (2013). Revenue generation: it’s impact on government developmental effort (a study of selected local council in Kogi east senatorial district). Global Journal of Management and Business Research Administration and Management, 8(5), 12-26.
Efanga, U.O., Etim, R. & Jeremiah, M.S. (2020). Public debt and economic development in Nigeria.IIARD International Journal of Banking and Finance Research, 6(1), 18-31.
Ehikioya, B.I., Omankhanlen, A.E., Osuma, G.O. & Inua, O.I. (2020). Dynamic relations between public external debt and economic growth in African countries: a curse or blessing. Journal of Open Innovation, 6(88), 1-16. DOI: https://doi.org/10.3390/joitmc6030088
Equiza-Goni, J., Faraglia, E. & Oikonomou, R. (2018). Union Debt Management.Cambridge
Working Papers in Economics. 1 – 31.
Faraglia, E., Marcet, A., Oikonomou, R. & Scott, A. (2019). Government Debt Management:
The Long and the Short of It. LBS Research Online. 86(6), 2554 -2604
Fosu AK. (2010). Inequality, income, and poverty: comparative global evidence. Soc Sci Q. 91(5), 1432-46. DOI: https://doi.org/10.1111/j.1540-6237.2010.00739.x
Hilton, S.K. (2021). Public debt and economic growth: contemporary evidence from a developing economy. Asian Journal of Economics and Banking, 5(2), 173-193. DOI: https://doi.org/10.1108/AJEB-11-2020-0096
Ibadin, P. O. & Oladipupo, A. O. (2015). "Indirect Taxes and Economic Growth In Nigeria," Economic Thought and Practice, 24(2), 345-364.
Ijeoma, N. B. (2013). An empirical analysis of the impact of debt on the Nigerian economy. International Journal of Arts and Humanities, 2(3), 165-191.
International Monetary Fund, & World Bank. (2014). Revised guidelines for public debt management. DOI: https://doi.org/10.5089/9781498343602.007
Li, L. & Li, M. (2017). Research on Performance Evaluation of Local Government Debt Expenditure Based on Debt Budget Management.China-USA Business Review.16(7), 339 -343. DOI: https://doi.org/10.17265/1537-1514/2017.07.006
Matiti, C. (2013). The relationship between public debt and economic growth in Kenya. International Journal of Social Sciences and Project Planning Management, 1 (1), 65- 86.
Ocheni, S.I., Ezugwu, C.I. & Akubo, D. (2017). Assessing comparative contributions of internally generated revenue and value added tax to the recurrent expenditure of Kogi state (2002-2014). Social Science Review, 3(2), 19-27.
Oladokun, O.O. (2015). Causal relationship between public debts and public expenditure in Nigeria. International Journal of Management and Applied Science, 1(8), 68-79
Olaoye, F.O. and Bankole, T. (2019). Statutory allocation and budget implementation in southwest Nigeria. Open Journal of Social Sciences, 7, 125-135. DOI: https://doi.org/10.4236/jss.2019.77012
Olaoye, C.O. & Olugbamiye, O.D. (2019).Effect of internally generated revenue on budget implementation in Ekiti state. Applied Finance and Accounting, 5(2), 10-19 DOI: https://doi.org/10.11114/afa.v5i2.4253
Onyeiwu, C. (2012). Domestic debt and the growth of Nigerian economy.Research Journal of Finance and Accounting, 3(5), 1-15.
Onyekpere, E. (2018) Where Are the Budget Implementation Reports. Available at:https://punchng.com/where-are-the-budget-implementation-reports
Opara, I.V., Nzotta, S.M. & Kanu, S.I. (2021). Nigeria’s domestic debts and economic development. International Journal of Management Science and Business Administration, 7(5), 7-22 DOI: https://doi.org/10.18775/ijmsba.1849-5664-5419.2014.75.1001
Oyejide, T.A. (2005). Capital Flow and Economic Transformation: A Conceptual Framework. Proceedings of Central Bank of Nigeria 5th Annual Monetary Policy Conference, Abuja, Nov. 10th and 11th
Reed, M., Najarzadeh, R. & Sadati, S.Z. (2019). Analyzing the relationship between budget deficit, current account deficit, and government debt sustainability. Journal of WEI Business and Economics, 8, 20-31. DOI: https://doi.org/10.36739/jweibe.2019.v8.i1.15
Saungweme, T. & Odhiambo, N.M., (2018). Public debt service and economic growth: a survey of international literature. Applied Econometrics and International Development, 18(2), 129-142.
Shi, H., Song, D., and Ramzan, M. (2025), Institutional quality, public debt and sustainable economic growth: evidence from a global panel. Sustainability, 17 (14). DOI: https://doi.org/10.3390/su17146487
Smith, R.W. and Thomas, D.L. (2004). Public Budgeting in America. Pearson, Upper Saddle River, NJ.
Sporakis, V. & Kotsios, S. (2021). Public debt dynamics: the interaction with national income and fiscal policy. Journal of Economic Structures, 10(8), 1-22. DOI: https://doi.org/10.1186/s40008-021-00238-4
Ugoh, S.C. and Ukpere, W.I. (2009). Problems and prospects of budgeting and budget implementation in Local Government System in Nigeria.African Journal of Business Management, 3(12), 836-846
Ulgenturk, L. (2017). The role of public debt managers in contingent liability management. OECD Working Papers on Sovereign Borrowing and Public Debt Management No. 8. 1 – 47.
Van, V.T.T., Ha, N.T.T., Quyen, P.G., Anh, L.T.H. & Loi, D.T. (2020). The relationship between public debt, budget deficit, and sustainable economic development in developing countries: the role of corruption control. Jurnal Ekonomi & Studi Pembangunan, 21(1), 84-104 DOI: https://doi.org/10.18196/jesp.21.1.5033
Zahariev, A. et al. (2020). Debt Management Evaluation through support Vector Machines: on he example of Italy and Greece. Entrepreneurship and sustainability Issues. No 7(3), 2382 – 2393. DOI: https://doi.org/10.9770/jesi.2020.7.3(61)
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Victoria Bamitale Aremu
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The FUDMA Journal of Accounting and Finance Research (FUJAFR) operates a copyright policy that ensures a balance between author rights and wide dissemination of scholarly work.
1. Author Copyright Retention
Authors retain full copyright of their published work without restriction. Submission to FUJAFR does not transfer ownership of copyright to the journal.
2. License to Publish
By submitting a manuscript and upon acceptance, authors grant FUJAFR:
- The right to publish, reproduce, and distribute the article
- The right to identify itself as the original publisher of the work
This grant is non-exclusive, meaning authors are free to reuse their work in other contexts, provided proper acknowledgment of the original publication in FUJAFR is made.
3. Licensing of Published Content
All articles are published under the:
Creative Commons Attribution-NonCommercial License (CC BY-NC 4.0)
Under this license:
- Users may share and adapt the work for non-commercial purposes only
- Proper attribution to the author(s) and the journal is required
- Any commercial use requires explicit permission from the copyright holder
4. Author Reuse Rights
Authors are permitted to:
- Archive their published articles in institutional repositories or personal websites
- Share their work for educational and research purposes
- Reuse portions of their work in future publications (e.g., books or other articles), provided proper citation of the original publication is included
5. Third-Party Content
Authors are responsible for obtaining permission to use any third-party copyrighted material (e.g., images, tables, datasets) included in their manuscripts. Proper acknowledgment must be provided where required.
6. Attribution Requirement
All users of FUJAFR content must provide appropriate credit, including:
- Author name(s)
- Article title
- Journal name (FUJAFR)
- Year of publication
