The Debt Management Office (DMO) on Wednesday reported an increase in public debt to N22.7 trillion in the first quarter of this year, representing 4.5 percent growth over the preceding quarter’s debt profile.

The agency attributed the growth to increased domestic borrowing by federal and state governments as well as rising foreign borrowings by the former.

The latest data on the public debt profile sourced from the Debt Management Office (DMO), showed that debt servicing cost also increased to N724 billion, rising by 173 percent, in the quarter under review.

The Office attributed the rising debts largely to “the domestic debts of states and the Federal Capital Territory (FCT) as well as the $2.5 billion Eurobond issued in February 2018 whose proceeds were still being deployed to redeem maturing domestic debt.”

In addition, it reported that despite the burgeoning debt profile the implementation of the debt management strategy, which entails an increase in the External Debt Stock through new external borrowings and the substitution of high cost domestic debt with low cost external debt, was achieving the desired results.

The DMO listed some of the key trends in the strategy as including, the share of the External Debt Stock in the Total Public Debt rose to 30 percent as at March 31, 2018, compared to 17 percent in 2015, 20 percent in2016 and 27 percent in 2017.

It also reported a decline in market interest rates from 13 –14 percent per annum in December 2017 to 11 –13 percent p.a. in Q1’18 due to the redemption of N279.67 billion of Nigerian Treasury Bills (NTBs) using some of the proceeds of the $2.5 billion Eurobond issued in February 2018, as indicative of the fact that the strategy was working

The agency stated further: “While the redemption of NTBs made more funds available to banks for lending to the private sector, the decline in Interest Rates implies lower cost of borrowing for the private sector. Thus, the government is actively enabling the private sector through the instrumentality of financial markets, to play a leading role in economy.”

A further analysis of the data showed that the Federal Government spent N724 billion on debt servicing in the first quarter of this year, up by 173 percent, from the N264.84 billion spent in the preceding quarter.

Similarly, the data showed that domestic debt service rose to N643.6 billion in the quarter in review, up from N236.04 billion in the last quarter of 2017.

This is even as the Office reported that external debt service rose by 179 percent to $225.25 million or N81 billion in Q1’18 from the $80.6 million or N29 billion recorded in Q4 2017.