Emma Ujah, Abuja Bureau Chief
The Federal Government has disagreed with the World Bank on the latter’s debt servicing/revenue ratio for the first half of 2026, put at 124 percent.
The bank in its recent Nigeria Development Update (NDU) reported that federal government debt servicing was 124 percent above its revenue.
However, the Federal Ministry of Finance, in a statement, yesterday, faulted the bank’s analysis, explaining that the debt servicing figure included those of the state governments and that it was, therefore, wrong to analyse it against the federal government revenue for the period under consideration.
The statement read in part, “This conclusion is misleading, for three reasons, the government said.
“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 reported revenue is also incomplete. It excludes independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
” In addition, 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. 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.
“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.
” 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.
“Debt sustainability is assessed on a full-year basis, not over six months. The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46% of revenue.
“This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn.
“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.
“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 welcomes informed scrutiny of public finances. We encourage 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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