The Federal Ministry of Finance has challenged a World Bank report suggesting that Nigeria spent 124 per cent of its federal revenue on interest payments in the first half of 2026, arguing that the figure does not accurately reflect the country’s fiscal position.
In a statement issued on Sunday, October 18, 2026, the ministry described the interpretation of figures in the World Bank’s October 2026 Nigeria Development Update as misleading, insisting that the calculation combines interest obligations involving different levels of government with an incomplete federal revenue figure.
The World Bank report put Nigeria’s interest payments at ₦7.7 trillion against federal revenue of ₦6.2 trillion between January and June 2026. However, the Finance Ministry explained that the interest figure includes payments made by the Federal Government on behalf of other tiers of government, including external loans owed by state governments.
According to the ministry, comparing these obligations with federal revenue alone produces a distorted ratio because the debt payments and revenue figures do not cover the same level of government.
The ministry also argued that the reported revenue figure excluded earnings already generated by government agencies and enterprises but not yet transferred to the Treasury.
It further explained that the timing of statutory tax payments typically results in higher government revenue collections in the second half of the year, making a six-month assessment less representative of the full-year fiscal position.
To support its argument, the ministry cited figures showing that 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 for 2025 was below 60 per cent.
The ministry said the full-year figure had declined from 97 per cent before the current administration’s reforms, describing the reduction as evidence of progress in the management of public finances.
It also pointed to growth in federal revenue between the first halves of 2025 and 2026, arguing that government earnings increased faster than interest costs during the period.
According to the ministry, federal revenue rose by 72 per cent, from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the corresponding period of 2026.
Over the same period, interest payments increased by 38 per cent, rising from ₦5.6 trillion to ₦7.7 trillion.
The ministry said the difference between the growth rates reduced the interest-to-revenue ratio by 32 percentage points, from 156 per cent to 124 per cent.
It added that the gap between interest payments and federal revenue narrowed from ₦2 trillion in the first half of 2025 to ₦1.5 trillion in the first half of 2026.
The ministry maintained that these figures demonstrated improvements in revenue performance and should not automatically be interpreted as evidence of fiscal distress.
It also argued that Nigeria’s debt sustainability should be assessed using full-year figures rather than data covering only six months.
Citing the same World Bank report, the ministry said the institution projected Nigeria’s total debt service, including principal repayments and interest, at 46 per cent of revenue for the full year 2026.
It described the projection as a more appropriate benchmark for evaluating the country’s debt obligations relative to government revenue.
The ministry also defended the Federal Government’s borrowing activities, stating that all loans fall within the limits approved by the National Assembly under the 2026 Appropriation Act and the government’s approved borrowing plan.
It added that federal borrowing complies with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003.
According to the ministry, borrowing information is published regularly by the Debt Management Office to ensure transparency in public debt management.
While acknowledging the importance of scrutiny of government finances, the ministry urged analysts and commentators to interpret fiscal data within the appropriate context and ensure that the figures being compared cover the same categories of revenue and debt obligations.
The dispute highlights the importance of how Nigeria’s debt burden is measured, particularly the distinction between interest payments and total debt service, as well as the difference between half-year figures and full-year projections.
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