The Federal Government has disagreed with the World Bank’s assessment that Nigeria’s interest payments exceeded its revenue by 24% in the first half of 2026, arguing that the calculation does not accurately reflect the Federal Government’s fiscal position.
The disagreement followed the World Bank’s latest Nigeria Development Update, which reported a debt servicing-to-revenue ratio of 124% for the period.
In a response, the Federal Ministry of Finance said the analysis was misleading because the interest payment figures included obligations the Federal Government services on behalf of other tiers of government, while the revenue figure used for comparison did not capture all government receipts.
The ministry also argued that the first half of the year does not provide a complete picture of annual government revenue and debt-servicing obligations.
According to the Finance Ministry, one major problem with the World Bank’s calculation is that it compares interest payments covering more than the Federal Government alone against federal revenue.
The ministry explained that the interest figure includes debt serviced by the Federal Government on behalf of other levels of government, including external loans obtained by state governments.
It argued that comparing these obligations with federal revenue alone produces a distorted ratio because debt and revenue figures should cover the same level of government.
The ministry also maintained that the revenue figure used in the calculation was incomplete because it excluded independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
It further noted that government revenue collection is affected by the timing of statutory tax payments, with a larger share typically collected in the second half of the year.
The Finance Ministry said the interest-to-revenue ratio declined from 156% in the first half of 2025 to 124% in the corresponding period of 2026.
It attributed the improvement to revenue growth outpacing the increase in interest payments.
According to the ministry, federal revenue rose by 72%, from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the first half of 2026.
Over the same period, interest payments increased by 38%, rising from ₦5.6 trillion to ₦7.7 trillion.
The ministry said the difference between interest payments and revenue consequently narrowed from ₦2 trillion to ₦1.5 trillion.
It described the figures as evidence that the administration’s economic reforms were improving revenue performance relative to interest costs.
However, the figures also show that interest payments remained higher than the federal revenue figure cited by the ministry during the first half of 2026, underscoring the importance of how the ratio is defined and measured.
The ministry argued that Nigeria’s debt sustainability should be assessed using full-year figures rather than data covering only six months.
It pointed to the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46% of revenue.
The ministry described this projection as a more appropriate benchmark for assessing the country’s debt-servicing burden.
The two measures, however, should be distinguished. The 124% figure cited in the disagreement concerns interest payments relative to revenue for the first half of the year, while the 46% projection covers full-year debt service, including both interest and principal repayments.
They therefore measure different periods and different components of debt obligations.
The Finance Ministry also maintained that Federal Government borrowing is being conducted within the limits approved by the National Assembly under the 2026 Appropriation Act and the government’s approved borrowing plan.
The statement comes amid ongoing scrutiny of Nigeria’s debt burden, revenue generation and the fiscal effects of the government’s economic reforms.
Debt-servicing ratios are closely watched because they indicate how much of government revenue is committed to meeting borrowing costs, potentially leaving less money available for infrastructure, healthcare, education, security and other public services.
The disagreement highlights the importance of examining the underlying data, the scope of government obligations and the period covered when assessing Nigeria’s public finances.
The debate over debt servicing comes alongside concerns about the social impact of Nigeria’s economic reforms.
A headline accompanying the report states that the number of Nigerians living below the poverty line has risen to 104 million, according to the World Bank.
The poverty figure adds another dimension to the economic debate, as policymakers face the challenge of improving government finances while addressing the cost of living and the welfare of vulnerable households.
The Finance Ministry has emphasised rising revenue and a declining interest-to-revenue ratio as signs of progress. The broader assessment of the reforms, however, also involves developments in poverty, household purchasing power, employment and access to essential services.
The central issue is how Nigeria can sustain revenue growth, manage its debt obligations and improve living standards while maintaining economic stability.
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