Public Debt Burden, Institutional Quality and Health Outcome in Nigeria

Abstract

This study examines the impact of public debt burden and institutional quality on health outcomes in Nigeria, utilizing empirical analysis on data spanning from 1986 to 2022. The study utilized the Autoregressive Distributed Lag (ARDL) bounds test for cointegration analysis, demonstrating that life expectancy, as a proxy for health outcomes, is cointegrated with external debt to GDP, domestic debt to GDP, debt service to exports, number of bed spaces per 1000 people, number of physicians per 1000 people, total health expenditure, and the corruption index ranking, indicating a long-term equilibrium relationship. The empirical findings revealed that institutional quality, as measured by the corruption ranking index, has a significant inverse effect on health outcomes in both the long and short run. In contrast, the fiscal freedom index shows a direct, though insignificant, impact on health outcomes in the long run, becoming significant in the short run. Additionally, both the external and domestic debt burdens negatively and significantly affect health outcomes in both the short and long run. In contrast, the debt service to exports ratio has a positive influence on health outcomes in the long run but an adverse effect in the short run. Government health expenditure positively and significantly impacts on health outcomes in both the long and short run. The physicians per 1000 population have a negative long-run effect but a positive short-run effect on health outcomes, while the number of bed spaces per 1000 population consistently has a positive effect. The study concluded that external and domestic debt burdens reduce Nigeria’s health outcomes, whereas debt service has a beneficial impact on health in the long run. Institutional quality also significantly contributes to the improvement of health outcomes. Therefore, the study recommended that thorough assessment of debt-financed health projects for sustainability, prioritization of low-interest public loans for health financing, reduction in reliance on external debt for health expenditures, enhancement of transparency and accountability in health spending, and institutional reforms to combat corruption and improve the efficiency of public health investments and its outcome.

Keywords: Public Debt Burden; Institutional Quality; Health Outcomes; Life Expectancy; External Debt; Domestic Debt; Debt Servicing; Fiscal Freedom; Corruption; Government Health Expenditure; Nigeria; ARDL.