Abstract

<p>Debt plays a significant role in the development of the global economy. Nigeria’s debt profile has continued to rise amidst dwindling revenue which has continued to drain the resources meant for capital projects. However, this has put the country at the verge of high debt service risk which could lead to the country’s loan default, thus draining its reputation on the global scene. The paper therefore investigated the impact of debt service on poverty reduction efforts in Nigeria. To achieve this objective, Vector Autoregressive technique was employed on time series data for the period 1986 to 2023. Findings from the paper revealed that debt service, debt stock and exchange rate had positive and insignificant impact on poverty in Nigeria. The paper recommended among other policies that government should channel all borrowed funds into productive activities that are investment yielding to accommodate more unemployed people to reduce the incidence of poverty. In addition, the government should endeavor to cut down their rate of borrowing for recurrent spending to reduce the amount of accumulated debt stock in the country. All leakages from the government coffers should be blocked to ensure transparency in the execution of capital projects in the country where investors can leverage on for growth and development.</p>