By Emmanuella Opara | October 18th 2026
KEY POINTS
- The Federal Government has disputed the World Bank’s assessment that interest payments consumed 124 per cent of federal revenue in the first half of 2026.
- The Finance Ministry said the calculation excluded some government revenue and included debt serviced on behalf of state governments.
- The ministry reported that federal revenue grew by 72 per cent year-on-year, compared with a 38 per cent increase in interest payments.
- The government did not provide revised figures or an alternative interest-to-revenue ratio to support its position.
MAIN STORY
The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, arguing that the reported interest-to-revenue ratio for the first half of 2026 does not accurately reflect the country’s fiscal position.
The Federal Ministry of Finance said the calculation showing that interest payments consumed 124 per cent of federal revenue was misleading because it compared debt obligations covering multiple tiers of government with revenue attributed solely to the Federal Government.
The ministry stated its position in a statement issued on Sunday and shared by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on his X account.
The dispute followed the World Bank’s October 2026 Nigeria Development Update, which reported federal revenue of N6.2 trillion and interest payments of N7.7 trillion for the first half of the year.
An analysis of the figures showed that interest payments represented approximately 124.2 per cent of revenue, exceeding government earnings by N1.5 trillion.
However, the ministry argued that the interest figure included debt serviced by the Federal Government on behalf of other tiers of government, including external loans to state governments.
“The interest figure includes debt the Federal Government services on behalf of other tiers of government, including external loans to states. Measuring this against federal revenue alone overstates the ratio, which is only meaningful when debt and revenue cover the same level of government,” the ministry said.
It also argued that the revenue figure excluded income earned by government agencies and enterprises but not yet remitted to the Treasury.
According to the ministry, statutory payment schedules mean some taxes are collected predominantly in the second half of the year, making first-half revenue an incomplete basis for assessing annual debt obligations.
The ministry said the interest-to-revenue ratio stood at 156 per cent in the first half of 2025, compared with 124 per cent in the corresponding period of 2026. It also cited a full-year debt-service-to-revenue ratio below 60 per cent, compared with 97 per cent before the current administration’s reforms.
It attributed the change to improvements in fiscal management, pointing to an increase in federal revenue from N3.6 trillion in the first half of 2025 to N6.2 trillion in the same period of 2026.
The ministry said revenue rose by 72 per cent over the period, while interest payments increased by 38 per cent, from N5.6 trillion to N7.7 trillion. It added that the gap between interest payments and revenue narrowed from N2 trillion to N1.5 trillion.
“This is the result of reforms working, not a sign of fiscal distress,” the ministry said.
It also rejected the use of a six-month fiscal snapshot as a definitive measure of debt sustainability, arguing that full-year projections provided a more appropriate basis for assessment.
“The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue. This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement read.
The ministry further defended the Federal Government’s borrowing programme, saying all loans were lawful and duly approved.
It maintained that borrowing remained within the limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
According to the statement, government borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003. It added that the Debt Management Office regularly published details of the country’s debt obligations.
However, the ministry did not provide revised revenue or interest-payment figures, or an alternative ratio, to substantiate its challenge to the World Bank’s calculation.
THE ISSUES
The disagreement centres on whether comparing federal interest payments with federal revenue provides an accurate measure of Nigeria’s debt burden when some debt obligations are serviced on behalf of state governments.
The ministry also argues that revenue collection patterns and the timing of remittances make first-half figures an incomplete measure of annual fiscal performance.
While it cited stronger revenue growth and a lower interest-to-revenue ratio compared with the previous year, it did not provide revised figures to demonstrate how its adjustments would change the reported ratio.
WHAT’S BEING SAID
“This is the result of reforms working, not a sign of fiscal distress,” the Federal Ministry of Finance said.
“The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue. This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the Federal Ministry of Finance said.
WHAT’S NEXT
The debate over Nigeria’s debt sustainability will depend partly on how government revenue, interest payments and other debt obligations are measured across different periods and levels of government.
The ministry’s statement did not provide an alternative calculation or revised figures to reconcile its position with the World Bank’s reported numbers.
BOTTOM LINE
The Federal Government has disputed the World Bank’s assessment of Nigeria’s interest burden, citing differences in the treatment of revenue and debt obligations. However, without revised figures or an alternative ratio, the ministry’s statement leaves its challenge to the reported 124 per cent figure without a comparable calculation.
