Increasing level of External debt in Nigeria creates a fiscal deficits and budgetary
constraints. Hence, this study examined the effect of External Debt on Economic Growth
for the period 1986 -2017. Secondary data were extracted from Central Bank Statistical
Bulletin (2017), Central Bank of Nigeria Statistical online database and Debt
Management Office database. Gross Domestic Product at constant price that proxied
Economic Growth was the dependent variable while External debt Stock, External debt
repayment, Exchange rate and Inflation served as independent variables. With the aid of
Eview 9 software, Multiple regression and Granger Causality test were conducted.
Granger causality test shows there is a uni-directional causality between external debt
stock and economic growth for this time frame of study. This paper recommends that
external debt should be basically sourced for economic projects that will be self
financing and not always for political/social issues.