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The sustainability of External Debt and its impact on Economic Growth is an important theme in development economics and public policy research, particularly for emerging and low-income nations. The purpose of this study was to empirically investigate the dynamic effects of external debt and to analyse the moderating role of institutional quality on economic growth across a panel of countries. The study was based on the prevailing economic theories of debt-growth and the neoclassical growth model and a dynamic panel data methodology employing System Generalized Method of Moments (System GMM) and standard panel data models was followed. The findings show that the Panel Fixed Effects model yielded several significant results: external debt and debt services demonstrated a significant negative association with GDP, while short-term debt and political stability showed a significant positive relationship with growth. Organisations and policymakers can use these findings to design more effective debt management policies that prioritize short-term, productive debt and implement governance reforms to strengthen institutional quality, thereby mitigating the adverse effects of high external indebtedness on economic expansion