The Federal Government has rejected claims that its interest payments swallowed more than its entire revenue in the first half of 2026, insisting that figures drawn from the World Bank’s latest Nigeria Development Update give a distorted picture of the nation’s finances. In a statement issued on Sunday and shared on X by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, the Federal Ministry of Finance described the conclusion as misleading. It also dismissed concerns that rising interest costs threaten Nigeria’s debt sustainability.
At the heart of the dispute is the World Bank’s October 2026 update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities. The bank put federal revenue for January to June at ₦6.2 trillion, up from ₦3.6 trillion a year earlier, while interest payments climbed from ₦5.6 trillion to ₦7.7 trillion on the back of high domestic borrowing costs. Set side by side, the interest bill comes to about 124 per cent of revenue, leaving a gap of ₦1.5 trillion. That ratio has dominated public debate since the report came out.
The ministry raised three objections. It said the interest figure includes debt the Federal Government services on behalf of other tiers of government, including external loans to states, and that measuring it against federal revenue alone “overstates the ratio”. It argued that the revenue figure left out money already earned by agencies and government enterprises but not yet paid into the Treasury. It also said some taxes are collected mostly in the second half of the year, making a six month snapshot a poor guide to annual obligations.
The government went further, reading the same numbers as proof of progress. By its account, federal revenue rose by 72 per cent between the two periods while interest payments grew by 38 per cent, pulling the interest to revenue ratio down from 156 per cent in the first half of 2025 to 124 per cent this year. The arithmetic holds against the World Bank’s figures, and the gap between interest and revenue did narrow from ₦2 trillion to ₦1.5 trillion. “This is the result of reforms working, not a sign of fiscal distress,” the ministry said.
The ministry pointed to the World Bank’s own projection that total debt service, covering both interest and principal, will equal 46 per cent of revenue for the whole of 2026, calling it the proper benchmark. It said the full year debt service to revenue ratio fell below 60 per cent in 2025, compared with 97 per cent before the current reforms. It also said every loan fell within limits approved by the National Assembly under the 2026 Appropriation Act, in line with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003. The statement did not, however, provide revised revenue or interest figures or an alternative ratio.
Other numbers in the World Bank report point to where the strain is showing. Interest payments rose to 3.1 per cent of GDP in the first half, from 2.5 per cent, while federal revenue stood at about 2.5 per cent of GDP. Reported capital spending fell to ₦700 billion from ₦2.2 trillion a year earlier, meaning the government spent 11 times more on interest than on capital projects over the six months. Personnel costs rose to ₦4.2 trillion from ₦3.7 trillion after wage adjustments, while total expenditure grew to ₦16.1 trillion from ₦14.6 trillion.
The revenue story itself is mixed. The World Bank credited the increase to a recovery in oil receipts, stronger company tax collections and higher independent revenue. Customs receipts held steady, while VAT collections stayed largely flat.
The debt stock behind the interest bill has grown quickly. Data from the Debt Management Office show total public debt at ₦166.79 trillion as of June 30, 2026, up from ₦87.38 trillion three years earlier, shortly after President Bola Tinubu took office. That is a rise of about 91 per cent, part of it driven by naira depreciation, which raised the local currency value of foreign loans. Domestic debt now accounts for ₦91.59 trillion, or almost 55 per cent of the total.
The DMO figures also shed light on the ministry’s first objection. The Federal Government accounts for ₦152.77 trillion of the debt, while the 36 states and the Federal Capital Territory owe ₦14.01 trillion, of which ₦9.42 trillion is external. The ministry did not say how much of the ₦7.7 trillion interest bill relates to loans serviced for states, which leaves the size of its proposed adjustment unclear.
Both sides agree on one point: the first half figures are not the full story. The ministry is counting on stronger tax receipts in the second half to lift revenue, while the World Bank’s 46 per cent projection assumes the year will close on firmer ground. Full year accounts for 2026 will show which reading holds.