EFFECT OF INTERNATIONAL MONETARY FUND AND WORLD BANK LOANS ON NIGERIAN ECONOMIC GROWTH

Abstract

This paper empirically investigated the effect of International Monetary Fund (MIF) and World Bank Loans on the Nigerian Economic Growth, covering the period 1981-2020. Employing a Bound Test co-integration approach, the study revealed prominent among others that a significant long-run relationship exists among the variables. Data were analyzed using the Auto-Regressive Distributed Lags (ARDL) Model using the Ordinary Least Square Approach. The study concludes that International Monetary Fund and World Bank Loans have significant effect on the Nigerian Economic Growth. It further revealed that MIF/ World Bank Loans affect Nigerian Foreign Direct Investment (FDI) and Nigerian Gross National Expenditure (GNE) as percentages of Gross Domestic Product (GDP), because these variables influence commerce which have effect on economic growth but the magnitude and direction of which depends on the circumstances in which they operate. Hence, the recommendation is that if the economy of Nigeria wants to experience real growth, then IMF/world bank loans should be appropriated to areas of Foreign Direct Investment (GDI) and need such as infrastructural development and education. Also, IMF/world bank loans should be appropriated to areas of Nigerian Gross National Expenditure. In addition these loans are better priotized in locations where the comparative advantage is in the hands of a segment which can wield it most effectively.