The Federal Government has faulted the World Bank’s assessment that its interest payments stood at 124 per cent of revenue in the first half of 2026, arguing that the figure does not fully reflect the structure of public finances and the seasonal pattern of revenue collection.
The Federal Government has disagreed with the World Bank over its assessment of Nigeria’s debt-servicing burden, describing the bank’s reported 124 per cent interest-to-revenue ratio for the first half of 2026 as misleading when interpreted against federal revenue alone.
The Federal Ministry of Finance, in a statement, argued that the World Bank’s analysis failed to account for certain debt obligations serviced by the Federal Government on behalf of other tiers of government, including external loans contracted by state governments.
According to the ministry, comparing these obligations with federal government revenue alone creates a distorted picture because the debt and revenue figures do not cover the same level of government.
The disagreement follows the World Bank’s latest Nigeria Development Update (NDU), which reported that the Federal Government’s interest payments exceeded its revenue by 24 per cent during the first six months of 2026.
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The ministry, however, maintained that the figures should be interpreted within the broader context of government revenue collection, debt obligations and the timing of payments throughout the fiscal year.
FG Questions World Bank’s Revenue Calculations
Explaining its position, the Ministry of Finance said the reported revenue figure was incomplete because it excluded independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
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The ministry also pointed to the seasonal nature of revenue collection, noting that government receipts are typically higher in the second half of the year due to the statutory timing of certain tax payments.
To support its argument, the government cited the difference between the first-half and full-year figures for 2025.
According to the statement, Nigeria’s interest-to-revenue ratio stood at 156 per cent in the first half of 2025, while the full-year debt-service-to-revenue ratio fell below 60 per cent. The ministry also said the ratio had declined from 97 per cent before the current administration’s reforms.
The government presented these figures as evidence that assessing debt sustainability using only six months of revenue and expenditure data could produce conclusions that do not reflect the full-year fiscal position.
Revenue Rises Faster Than Interest Payments
The Ministry of Finance further highlighted changes in federal revenue and interest payments between the first half of 2025 and the corresponding period in 2026.
It said federal revenue increased by 72 per cent, rising from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the first half of 2026.
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Over the same period, interest payments rose by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion.
Based on these figures, the ministry said revenue was growing almost twice as fast as interest costs, while the gap between interest payments and revenue narrowed from ₦2 trillion to ₦1.5 trillion.
It added that the interest-to-revenue ratio declined from 156 per cent in the first half of 2025 to 124 per cent in the first half of 2026, representing a reduction of 32 percentage points.
The ministry attributed the development to the Federal Government’s ongoing economic and fiscal reforms, arguing that the figures reflected improvements in revenue generation relative to interest costs.
However, the figures also show that interest payments of ₦7.7 trillion remained higher than the ₦6.2 trillion in federal revenue recorded during the first half of 2026, underscoring the importance of the methodology used to assess the government’s fiscal position.
World Bank Projects 46% Full-Year Debt-Service Ratio
In defending its position, the Federal Government referred to the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.
The ministry described the full-year projection as a more appropriate benchmark for evaluating the country’s debt-servicing position, arguing that the assessment should account for the entire fiscal year rather than a six-month period.
The distinction is important because interest payments represent the cost of borrowing, while total debt service includes both interest and principal repayments. The two measures therefore capture different aspects of the government’s financial obligations.
The ministry’s argument is that the first-half interest-to-revenue ratio should not, on its own, be treated as a complete measure of Nigeria’s annual debt sustainability.
FG Insists Borrowing Complies With Existing Laws
The Federal Government also defended its borrowing practices, stating that every naira borrowed falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
It further maintained that all borrowing activities comply with the Fiscal Responsibility Act of 2007 and the Debt Management Office (Establishment) Act of 2003.
According to the ministry, borrowing information is regularly published by the Debt Management Office, which is responsible for managing and reporting the country’s public debt.
The government said it welcomed informed scrutiny of public finances but urged analysts and commentators to ensure that comparisons were based on consistent data and interpreted within the appropriate fiscal context.
It called for greater care in comparing debt obligations with revenue, stressing that figures covering different levels of government or different reporting periods could lead to misleading conclusions.
Debate Over Nigeria’s Debt Sustainability Continues
The disagreement highlights the continuing debate over Nigeria’s public finances, particularly the relationship between revenue generation, interest costs and the country’s overall debt obligations.
While the Federal Government has pointed to rising revenue and a declining first-half interest-to-revenue ratio as signs of progress, the reported figures show that interest payments continued to exceed federal revenue during the period under review.
The ministry’s position is that a broader assessment incorporating the full financial year, additional revenue sources and the appropriate allocation of debt obligations provides a more accurate picture of the government’s fiscal position.
The World Bank’s reported assessment, meanwhile, has brought renewed attention to the need for clear and consistent measures of debt sustainability, including the distinction between interest payments and total debt service.
Ultimately, the debate centres on how Nigeria’s debt burden should be measured and whether improvements in revenue generation will be sufficient to ease pressure from interest payments and other public spending commitments.
As the government continues to defend its fiscal reforms, the full-year revenue and debt-service figures will be important in assessing how the country’s financial position evolves in 2026.
