FG Defends Debt Figures as Interest Payments Hit N7.7tn

Nigeria’s interest payments exceeded government revenue by N1.5 trillion in the first half of 2026, even as revenue collections rose 72 per cent. The Federal Government has defended its debt figures, saying the reported interest-to-revenue ratio does not give the full picture.

Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, pushed back against concerns in the World Bank’s latest economic assessment. The Ministry of Finance issued a statement titled ‘Setting the Record Straight: Interest Payments and Revenue in H1 2026’ in Abuja.

What the World Bank data show

The World Bank’s October 2026 Nigeria Development Update said federal interest payments rose to N7.7 trillion between January and June 2026, from N5.6 trillion in the same period of 2025, an increase of 37.5 per cent. Federal revenue rose from N3.6 trillion to N6.2 trillion, up 72.2 per cent.

Interest payments therefore fell from about 156 per cent of revenue in H1 2025 to 124.2 per cent in H1 2026. The figures show improved revenue relative to interest costs, but government earnings still did not cover interest payments in the six months.

The World Bank linked the rise in interest costs partly to high domestic borrowing rates. Interest payments rose from 2.5 per cent of gross domestic product in H1 2025 to 3.1 per cent in H1 2026.

Ministry disputes the ratio

The Ministry argued that the 124 per cent ratio should not be interpreted in isolation. It said the interest figure includes obligations the Federal Government services on behalf of other tiers of government, including external loans to states. Comparing those obligations with federal revenue alone exaggerates the burden because debt and revenue do not cover the same level of government, it said.

The Ministry also said reported revenue excludes independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury. It added that statutory payment schedules mean some tax revenues are collected later in the year.

The explanation does not remove the immediate cash-flow pressure in the reported figures. Whether the ratio overstates the underlying burden depends on the precise coverage of debt and revenue data, including intergovernmental obligations and outstanding agency remittances.

Capital spending falls

Federal capital expenditure in H1 2026 fell to about N700 billion, or 0.3 per cent of GDP, from about 1 per cent of GDP in H1 2025. At N7.7 trillion, interest payments were roughly 11 times reported capital expenditure.

Total federal expenditure rose from N14.6 trillion in H1 2025 to N16.1 trillion in H1 2026. Personnel costs rose from N3.7 trillion to N4.2 trillion.

The low capital spending does not by itself show that projects were abandoned. It raises questions about budget implementation, the timing of expenditure and whether improved revenue can be converted into public investment. The World Bank cautioned against treating the improved early-year fiscal outturn as proof that expenditure pressures had been resolved.

Full-year debt service forecast

The Ministry said debt sustainability should be assessed over a full financial year, not a six-month snapshot. It cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering principal and interest, would be 46 per cent of revenue.

The Ministry also said the full-year 2025 debt-service-to-revenue ratio was below 60 per cent, compared with 97 per cent before the current administration’s reforms. It described the fall in the half-year interest-to-revenue ratio as evidence that fiscal reforms were producing results.

The 124.2 per cent figure covers interest payments relative to revenue in H1 2026. The 46 per cent projection covers interest and principal repayments over the full year. The Ministry said the two measures cover different periods and components and should not be treated as directly comparable.

The World Bank’s October report noted that stronger oil receipts, improved corporate tax collections and higher independent revenues supported the revenue increase. VAT collections remained comparatively flat, while customs revenue was broadly stable. The improvement in collections is significant, but the rise in interest payments shows that revenue growth alone does not automatically solve the government’s financing constraints.

The pressure matters for the naira and Nigerian businesses because higher interest costs leave less fiscal room for infrastructure and public services, while the government still faces competing demands for debt service, wages and capital spending.