The Impact Of International Financial Institution’S Loans On Government Capital Expenditure In Nigeria
Uzoma Chidoka Nnamaka Ph.D
Rivers State Universal Basic Education Board, Port Harcourt, Nigeria
Keywords: International Financial Institution’s loans, Government capital expenditure, Cointegration, Nigeria
Abstract
This paper assessed the loans from international financial institutions and government capital expenditure in Nigeria. The objective of the study is to determine the impact of loans from Paris club, London club, multilateral and bilateral sources on government capital expenditure in Nigeria. The stochastic characteristics of each time series was examined by testing their stationarity status using Augmented Dickey-Fuller test followed by the Johansen co-integration test. Findings from the study showed that Paris club loan, London club loan, multilateral loans and bilateral loans have enormous impact on government capital expenditure in Nigeria. To that effect, the alternative hypothesis of a long run relationship between government capital expenditure and international financial institutions loans was accepted. The implication of this is that the inflow of foreign loans from international financial institutions improved capital investment in Nigeria. Going by the findings from the study therefore recommended that the loans sourced externally should be invested in capital projects that will in turn yield proceeds to be used to repay the loans.