The Federal Government has disputed claims that its interest payments reached 124% of revenue in the first half of 2026, arguing that the figure presents an incomplete picture of its fiscal position because it excludes some government revenue and combines debt obligations across different tiers of government.
The Federal Ministry of Finance, in a press statement issued on Sunday, October 18, said the ratio cited in recent analysis based on the World Bank’s October 2026 Nigeria Development Update was misleading because it compared federal interest payments with an incomplete revenue base.
The ministry said the interest figure includes debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states, while the revenue figure excludes independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury.
FG explains Q2 revenue
It also argued that federal revenue typically increases in the second half of the year because of the statutory timing of certain tax payments, making a half year comparison an unreliable measure of the government’s overall debt sustainability.
- “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,” the Ministry stated.
The ministry said federal revenue increased by 72% year on year to N6.2 trillion in the first half of 2026, compared with N3.6 trillion in the same period of 2025.
Interest payments, meanwhile, rose by 38% to N7.7 trillion from N5.6 trillion over the same period.
The difference between interest payments and revenue consequently narrowed to N1.5 trillion from N2 trillion a year earlier, according to the ministry.
It said the figures showed that revenue was growing almost twice as fast as interest costs, contributing to a 32 percentage point decline in the interest to revenue ratio.
World Bank says Nigeria’s interest payments are rising
In its 2026 Nigeria Development Update (NDU) titled ‘Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities,’ the World Bank said Nigeria’s interest payments rose to N7.7 trillion in the first half of 2026, from N5.6 trillion in the corresponding period of 2025.
According to the bank, the interest payment gulped 124.19 percent of the federal government revenue.
The bank said interest payments increased to 3.1 percent of gross domestic product (GDP) from 2.5 percent a year earlier.
FG says full year figures provide better debt assessment
However, the Finance Ministry argued that debt sustainability should be assessed using full year figures rather than a six month snapshot.
- It cited the World Bank’s projection that Nigeria’s total debt service, covering both interest and principal repayments, would amount to 46% of revenue in 2026.
- The ministry described this as a more appropriate benchmark for assessing the government’s debt servicing position, distinguishing it from the 124% ratio based on interest payments and revenue in the first half of the year.
- The ministry also cited the decline in the full year debt service to revenue ratio to below 60% in 2025, compared with 156% in the first half of that year and 97% before the current administration’s reforms.
It attributed the improvement to the government’s fiscal reforms and the stronger revenue performance recorded since their implementation.
FG touts reform success
The concern with the World Bank’s claims came as the government says Nigeria is beginning to change how it is perceived internationally, pointing to its tax overhaul and broader economic reforms as evidence that the country is moving towards sustainable growth and shared prosperity.
- Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, said this as he explained his “Nigeria rising” narrative at the 2026 IMF-World Bank Meetings in Thailand.
- According to him, the Nigeria Rising narrative was designed to communicate the changes taking place in the country and challenge perceptions that do not reflect the government’s assessment of its economic progress.
Speaking at the closing press briefing of the Meetingss in Bangkok, Thailand, Oyedele said he observed growing interest in Nigeria among international stakeholders during the meetings, which he attributed to the country’s ongoing reform programme.