By Eshioromeh Sebastian
The Federal Government has pushed back against recent analysis citing the World Bank’s October 2026 Nigeria Development Update, which claimed that Federal Government interest payments reached 124% of revenue in the first half of 2026, describing the conclusion as misleading.
In a press release issued on Sunday, the Federal Ministry of Finance, the government said the 124% figure was flawed for three reasons: it compares mismatched figures against an incomplete revenue base, the position has improved significantly even on the same calculation, and a half-year snapshot is not a measure of debt sustainability.
According to the ministry, 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, it argued, overstates the ratio, which is only meaningful when debt and revenue cover the same level of government.
The ministry added that the reported revenue is also incomplete, as it excludes independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
It noted that more revenue is typically earned in the second half of the year than in the first due to the statutory timing of certain tax payments, which, it said, explains 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,” the ministry said.
Even on the same calculation, the government said the position has improved significantly. 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, while interest payments rose by a much slower 38%, from ₦5.6 trillion to ₦7.7 trillion.
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 stated.
Half-year snapshot not a measure of sustainability
The ministry further argued that debt sustainability is assessed on a full-year basis, not over six months. It noted that the same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46% of revenue — describing this as the appropriate benchmark and a guide to avoid the invalid conclusions being drawn.
Borrowing lawful and approved
On borrowing, the Federal Government insisted that every naira borrowed falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan. It said 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.
The ministry said it welcomes informed scrutiny of public finances, urging analysts and commentators 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.
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