Nigeria disputes World Bank debt figures as quarterly budget reports go missing

Nigeria’s failure to publish budget implementation reports since the third quarter of 2025 is complicating scrutiny of its public finances, just as a dispute with the World Bank exposes competing assessments of the country’s debt burden.

The World Bank’s latest Nigeria Development Update says the federal government spent N7.7 trillion on interest payments in the first half of 2026, against revenue of N6.2 trillion.

The Finance Ministry has challenged the interpretation, citing revenue excluded from the calculation and debt serviced on behalf of state governments, leaving questions over the scale of the fiscal squeeze and its implications for public spending.

Nigeria’s federal government accounted for 92% of the country’s N166.8 trillion total public debt as of June 2026, with outstanding obligations of N152.7 trillion, according to the Debt Management Office.

The 36 states and the Federal Capital Territory owed a combined N14.1 trillion, representing the remaining 8% of the total.

Data from the World Bank’s report, Beyond the Federal Purse, shows that interest payments amounted to 124.2 percent of federal revenue during the period.

The imbalance means interest obligations alone consumed 124.2 percent of federal revenue, leaving the government with insufficient internally generated resources to cover salaries, infrastructure and other public services without additional borrowing or alternative financing.

While revenue rose 72.2 percent year-on-year, interest payments climbed 37.5 percent, highlighting how the cost of Nigeria’s debt is limiting the fiscal benefits of improved revenue mobilisation.

The fiscal pressure is also reflected in spending patterns. Total federal expenditure increased 10.3 percent to N16.1 trillion in the first half, but capital expenditure fell to N700 billion, while interest and personnel costs accounted for about 73.9 percent of total spending.

The International Monetary Fund warned on October 14 that rising interest bills were becoming a larger and increasingly inflexible burden on public resources, leaving governments with less room for public investment and social spending.

Matilda Adefalujo, economic research analyst at Meristem, said the figures reflected a weakness in Nigeria’s fiscal structure, with debt servicing taking resources that could support development priorities.

“With interest payments absorbing 124 percent of federal revenue, the government is effectively spending more than it earns just to service existing obligations, leaving limited fiscal space for infrastructure, healthcare, education and other development priorities,” she said.

Adefalujo warned that inadequate public investment could constrain productivity and economic growth, ultimately limiting the government’s ability to generate the revenue needed to meet future obligations.

High domestic borrowing costs also make credit more expensive for businesses. Firms facing higher financing costs may postpone expansion, equipment purchases and worker training, limiting job creation and productivity gains.

Debt costs constrain human capital

The 2026 federal budget allocated N3.52 trillion to education and N2.48 trillion to health, bringing their combined allocation to N6 trillion. This is N1.7 trillion less than the N7.7 trillion spent on interest payments in the first half of 2026.

The comparison places the scale of the government’s debt interest bill alongside its planned investment in two major components of human capital. The budget allocations cover the full year, while the interest figure covers six months.

Actual releases and expenditure for education and health are needed to establish how much was spent on these sectors during the first half of the year.

Nigeria has failed to release its budget implementation report for 2026; the actual spending for the year remains undisclosed.

Under the Fiscal Responsibility Act of 2007, the government is legally required to publish budget execution and performance reports within 30 days of each quarter ending.

Nigeria’s economy grew 4.2 percent in the first half of 2026, while the World Bank reported that the poverty rate had stabilised for the first time since 2019.

Finance ministry disputes World Bank’s figures

The Federal Ministry of Finance has challenged the interpretation of the 124 percent interest-to-revenue ratio, arguing that it does not fully reflect the government’s fiscal position.

In a statement issued on October 18, the ministry said the interest figure included debt serviced by the federal government on behalf of other tiers of government, including external loans to states. It also argued that the revenue figure excluded independent earnings by government agencies and enterprises that had yet to be remitted to the Treasury.

The ministry said revenue collections typically rise in the second half of the year because of the timing of certain tax payments, making half-year comparisons an incomplete measure of debt sustainability.

It cited a full-year 2025 debt-service-to-revenue ratio below 60 percent, compared with 97 percent before the current administration’s reforms. It also said the World Bank projected full-year 2026 debt service, including interest and principal repayments, at 46 percent of revenue.

According to the ministry, federal revenue rose 72 percent between the first halves of 2025 and 2026, outpacing the 38 percent increase in interest payments. It said the decline in the interest-to-revenue ratio from 156 percent to 124 percent reflected the impact of fiscal reforms.

Interest payments cover the cost of borrowing, while total debt service includes principal repayments. The ministry’s full-year debt-service figures therefore measure a different component of the government’s obligations from the World Bank’s half-year interest-to-revenue ratio.

The ministry also maintained that federal borrowing complies with approved legislative limits and relevant debt-management laws.

Revenue remains below budget expectations

The World Bank reported that the federal deficit narrowed to N9.9 trillion in the first half of 2026, from N11 trillion in the corresponding period of 2025. However, revenue remained below budget expectations.

CFG Advisory said federal revenue was 64.4 percent below its straight-line half-year budget projection, arguing that the shortfall had affected expenditure and the deficit. The advisory called for an audit of compliance with the Fiscal Responsibility Act by the finance ministry and Budget Office.

SBM Intelligence said improved revenue collection was not translating into greater fiscal freedom because much of the additional income was being absorbed by existing debt obligations.

“The challenge is no longer that revenue mobilisation falls short. It is arithmetic: stronger collections are running into an increasingly expensive debt structure,” the research firm said.

The World Bank has urged the government to limit expensive borrowing, seek more concessional financing and extend debt maturities to reduce refinancing pressure.