Increased domestic borrowing by state governments as well as rising foreign borrowing by the federal government have pushed Nigeria’s public debt by 4.5 percent to N22.7 trillion in the first quarter of 2018, according to data from the Debt Management Office (DMO).

This is coming along with quantum 173 percent jump in the nation’s debt servicing cost to N724 billion during the quarter.

“The increase was accounted for largely by the increase in 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,” the DMO revealed on Wednesday.

However, giving the positive side of the development, DMO said the debt figures show that 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, is achieving the desired results in several areas.

Among the areas listed by the DMO are:

• 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.

• 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.

“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.” The DMO noted.

The federal government spent N724 billion on debt service in Q1’18, up by 173 percent from N264.84 billion spent in Q4’17, as domestic debt service hit N643.6 billion in Q1’18 up from N236.04 billion in Q4’17, while external debt service rose by 179 percent to $225.25 million or N81billion in Q1’18 from $80.6 million or N29 billion in Q4’18.