The Federal Ministry of Finance has disputed reports that the Federal Government spent 124 per cent of its revenue on interest payments in the first half of 2026, saying the figure was based on mismatched debt and revenue data.
The ministry said the ratio was misleading because the interest figure included debt obligations serviced by the Federal Government on behalf of other tiers of government, including external loans obtained by states, while the revenue figure covered only federal earnings.
In a statement issued on Sunday, the ministry argued that the calculation overstated the Federal Government’s interest burden and failed to account for other revenues earned by government agencies and enterprises but yet to be remitted to the Treasury.
The clarification followed public commentary citing the World Bank’s October 2026 Nigeria Development Update, which reportedly put the Federal Government’s interest payments at 124 per cent of revenue in the first half of the year.
The ministry said the ratio should be assessed using comparable revenue and debt figures, adding that revenue collection typically increased in the second half of the year because of the statutory timing of certain tax payments.
It cited the 2025 fiscal performance, when the interest-to-revenue ratio stood at 156 per cent in the first half of the year but fell below 60 per cent for the full year.
According to the ministry, the full-year figure represented an improvement from the 97 per cent recorded before the current administration’s economic reforms.
“This is a clear sign of the progress delivered by the current administration’s reforms,” the statement said.
The ministry also argued that the Federal Government’s revenue had grown considerably faster than its interest payments between January and June 2025 and the corresponding period in 2026.
It said federal revenue rose by 72 per cent, from N3.6 trillion in the first half of 2025 to N6.2 trillion in the first half of 2026.
Interest payments, however, increased by 38 per cent, from N5.6 trillion to N7.7 trillion over the same period.
The ministry said the difference in the growth rates showed that revenue was increasing at nearly twice the pace of interest costs.
It added that the interest-to-revenue ratio had consequently declined by 32 percentage points, from 156 per cent in the first half of 2025 to 124 per cent in the corresponding period of 2026.
The gap between interest payments and revenue also narrowed from N2 trillion to N1.5 trillion, according to the statement.
The ministry described the figures as evidence that the government’s reforms were improving fiscal performance rather than indicating worsening fiscal conditions.
“This is the result of reforms working, not a sign of fiscal distress,” it said.
The ministry further argued that a six-month snapshot was insufficient to determine whether Nigeria’s debt was sustainable, insisting that the assessment should be based on full-year figures.
It cited the World Bank’s projected debt-service-to-revenue ratio of 46 per cent for the full year 2026, covering both interest payments and principal repayments.
According to the ministry, the projected full-year figure was a more appropriate benchmark for assessing the country’s debt obligations than the first-half interest-to-revenue ratio.
The statement also defended the legality of the Federal Government’s borrowing, saying all loans fell within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
It said the government’s borrowing activities complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003.
The ministry added that the Debt Management Office regularly published information on the government’s borrowing activities.
While acknowledging the importance of public scrutiny of government finances, the ministry urged analysts and commentators to interpret fiscal data in context and ensure that comparable figures were used in their assessments.
“The Ministry welcomes informed scrutiny of public finances,” the statement said, urging commentators to compare like with like and seek clarification where the data was unclear.
The statement was issued by the Federal Ministry of Finance headquarters in Abuja on October 18, 2026.
However, the ministry’s clarification does not mean that interest payments accounted for only 60 per cent of federal revenue in the first half of 2026.
Its statement acknowledges the 124 per cent half-year ratio but argues that the figure is distorted by the mismatch between the debt obligations included and the revenue used in the calculation.
The below-60 per cent figure cited by the ministry relates to the full-year 2025 ratio, while the 46 per cent projection for 2026 covers total debt service, including principal repayments and interest.