The Federal Ministry of Finance has challenged the interpretation of a World Bank report that put the Federal Government’s interest payments at 124 per cent of revenue in the first half of 2026, arguing that the calculation does not capture the full revenue base or the scope of the debt being serviced.
The World Bank’s October 2026 Nigeria Development Update reported that interest payments exceeded government revenue during the period, triggering debate over the country’s fiscal position.
However, in a statement on Sunday, the ministry described the conclusion as misleading, arguing that the calculation included debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states.
“The Federal Ministry of Finance has noted recent analysis and public commentary which, citing the World Bank’s October 2026 Nigeria Development Update, claims that Federal Government interest payments reached 124% of revenue in the first half of 2026. This conclusion is misleading, for three reasons,” the statement reads.
The ministry said comparing interest payments with federal revenue alone overstated the ratio because the figures covered different levels of government.
“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 used in the calculation was incomplete because it excluded independent revenue generated by government agencies and enterprises but not yet remitted to the Treasury.
The ministry further noted that revenue collections typically rise in the second half of the year because of the statutory timing of certain tax payments.
“This is why the ratio stood at 156% in H1 2025, while the full-year 2025 debt-service-to-revenue ratio was below 60%, down from 97% before the reforms. This is a clear sign of the progress delivered by the current administration’s reforms.”
To support its position, the ministry highlighted an increase in revenue between the first halves of 2025 and 2026, saying collections grew faster than interest payments.
“Between the first half of 2025 and the first half of 2026, federal revenue rose by 72%, from ₦3.6 trillion to ₦6.2 trillion. Interest payments rose by a much slower 38%, from ₦5.6 trillion to ₦7.7 trillion,” the ministry said.
“Revenue is therefore growing almost twice as fast as interest costs. As a result, the interest-to-revenue ratio fell by 32 percentage points in a single year, from 156% to 124%, and the gap between interest and revenue narrowed from ₦2.0 trillion to ₦1.5 trillion. This is the result of reforms working, not a sign of fiscal distress.”
The ministry also argued that a six-month snapshot was insufficient to assess the sustainability of Nigeria’s debt, insisting that full-year figures offered a more appropriate basis for evaluating the country’s fiscal position.
It said the same World Bank report projected Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, at 46 per cent of revenue.
The ministry further maintained that federal borrowing was lawful and remained within approved limits.
“Every naira borrowed by the Federal Government falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan,” the statement reads.
“All borrowing is conducted in full compliance with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, and is published regularly by the Debt Management Office.”
While welcoming scrutiny of public finances, the ministry urged analysts and commentators to consider the context and scope of the figures they cite.
It encouraged them to apply the same rigour they seek “to hold the government to: compare like with like, read figures in context, and seek clarification where the data is unclear”.
