Public Debt Management and Capital Expenditure Performance in Nigeria

This study examines whether the way Nigeria manages its public debt is related to the performance of its capital budget. Capital expenditure performance is measured by the capital budget implementation rate, the ratio of actual to budgeted capital expenditure, and debt management is represented by the debt service-to-revenue ratio, the domestic share of public debt, the average interest cost of debt and the long-term share of debt, with debt-to-GDP, real GDP growth and the oil revenue share as controls. Annual data for 1990 to 2024 are analysed with an autoregressive distributed lag model, after unit root tests show a mixture of stationary and first-difference stationary series. The bounds test (F = 4.16) indicates a long-run relationship, and the error correction coefficient of −0.90 implies that about 90 per cent of a deviation is corrected within a year. In the long run, a higher debt service-to-revenue ratio and a larger domestic debt share are associated with lower implementation, a larger long-term debt share is associated with higher implementation, and average interest cost has no statistically significant association. A sensitivity check that replaces the dependent variable with the capital share of total expenditure retains the negative effects of debt service and domestic share, while the long-term share is significant only at the 10 per cent level and
the bounds test for that specification is inconclusive. The results point to debt service pressure and the domestic and maturity composition of borrowing as the channels through which debt management relates to capital budget execution.

Funding: This is a fully self-funded research

Conflict of Interest: The authors declare no conflicts of interest.

Ethics Approval: Not_applicable

Data Availability: Data will be made available upon reasonable request

AI-Assisted Writing: No AI tools were used in the preparation of this manuscript.