Nigeria spends more than its revenue to service N7.7tn debt in H1 – World Bank

The Federal Government spent N7.7tn servicing debt in the first half of 2026, surpassing its total revenue of N6.2tn by N1.5tn, according to the World Bank.

These figures signify that interest payments alone consumed 124.2 per cent of federal revenue between January and June, emphasizing the mounting pressure of debt obligations on public finances despite notable improvements in revenue collection.

These findings were detailed in the World Bank’s October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities.

The report indicates that interest payments increased by N2.1tn, or 37.5 per cent, moving from N5.6tn in the corresponding period of 2025 to N7.7tn in the first half of 2026. High domestic borrowing costs largely drove this surge, causing interest payments to rise from 2.5 per cent of Gross Domestic Product to 3.1 per cent.

Although the interest-to-revenue ratio improved from roughly 155.6 per cent in the first half of 2025 to 124.2 per cent in the same period of 2026, debt servicing continues to outstrip government earnings.

This trend raises critical concerns regarding funds allocated for infrastructure, healthcare, education, and essential public services, as a vast share of federal resources remains tied to debt obligations.

Federal revenue increased by N2.6tn, or 72.2 per cent, jumping from N3.6tn in the first half of 2025 to N6.2tn in the corresponding period of 2026. This performance stemmed from recovering oil receipts, stronger corporate tax collections, and higher independent revenues, whereas customs revenue remained stable and value-added tax collections showed minimal improvement.

However, these gains coincided with rising expenditures, as total federal spending grew by N1.5tn, or 10.3 per cent, from N14.6tn to N16.1tn. Personnel costs climbed from N3.7tn to N4.2tn due to wage adjustments, while capital expenditure experienced a sharp decline, falling from one per cent of GDP to 0.3 per cent, equivalent to approximately N700bn.

Combined interest and personnel costs reached N11.9tn, accounting for approximately 73.9 per cent of total federal expenditure and nearly twice the government’s revenue. Despite these fiscal strains, the fiscal deficit narrowed from N11tn (five per cent of GDP) in the first half of 2025 to N9.9tn (four per cent of GDP) in the first half of 2026.

The World Bank cautioned against viewing this improvement as a sign of underlying fiscal strength, pointing to suppressed capital spending and warning that upcoming recurrent and pre-election expenditures could intensify pressures.

Nigeria’s total debt stock reached approximately N177tn in 2025 (40 per cent of GDP), up from N67tn (27.6 per cent of GDP) in 2021, driven largely by exchange-rate valuation effects and accumulated liabilities like securitised Ways and Means advances.

To mitigate these vulnerabilities, the World Bank recommended limiting costly borrowing, prioritizing concessional financing, and extending debt maturities.