FG speaks on ‘124% debt interest-to-revenue figure

The Federal Ministry of Finance has disputed reports that interest payments on Nigeria’s debt consumed 124 per cent of Federal Government revenue in the first half of 2026, arguing that the figure does not fully reflect the government’s revenue position and debt obligations.

The ministry, in a press statement issued in Abuja on Sunday, October 18, said the widely reported figure was based on a comparison it described as incomplete because the interest payments included obligations serviced by the Federal Government on behalf of other tiers of government, including external loans contracted by states. Blueprint reports

It also argued that the revenue figure used in the calculation excluded independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury.

The clarification followed public debate over the World Bank’s October 2026 Nigeria Development Update, which reported that the Federal Government spent ₦7.7 trillion on interest payments in the first half of the year, compared with revenue of ₦6.2 trillion.

The figures put interest payments at approximately 124.2 per cent of reported federal revenue during the period, with the interest bill exceeding revenue by about ₦1.5 trillion.

However, the Finance Ministry said the ratio should be interpreted in the context of the scope of government debt obligations, the timing of revenue collections and the difference between half-year and full-year fiscal performance.

“The conclusion is misleading,” the ministry said, outlining three major reasons why it believes the reported figure does not provide a complete picture of the country’s debt position.

Ministry cites mismatch in debt and revenue figures

According to the ministry, the calculation compares interest payments covering obligations beyond the Federal Government with revenue attributed specifically to the federal tier.

It argued that some of the debt included in the interest figure is serviced by the Federal Government on behalf of other levels of government, including external loans obtained by state governments.

The ministry maintained that comparing such obligations exclusively against federal revenue produces a ratio that does not adequately reflect the corresponding revenue base.

It also said the revenue figure used in the calculation was incomplete because it did not include independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.

The ministry further explained that government revenue collection is affected by statutory payment schedules, with certain tax receipts typically generating higher collections in the second half of the year than in the first six months.

It cited the experience of 2025, when the half-year debt-service-to-revenue ratio stood at 156 per cent, but the full-year ratio fell below 60 per cent.

The ministry attributed the improvement to the impact of the current administration’s economic reforms, arguing that the full-year figures provide a more comprehensive basis for assessing the government’s fiscal position.

However, the comparison involves different reporting periods, and the ministry’s argument does not change the reported fact that first-half interest payments exceeded the federal revenue figure used by the World Bank.

Revenue grows faster than interest payments

The ministry also highlighted what it described as a significant improvement in revenue performance between the first half of 2025 and the corresponding period of 2026.

According to the statement, federal revenue increased by 72 per cent, rising from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the first half of 2026.

Interest payments, meanwhile, increased by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion over the same period.

The ministry said the difference in growth rates showed that revenue was increasing considerably faster than interest costs, which it presented as evidence of progress in the government’s fiscal reforms.

It also noted that the interest-to-revenue ratio 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 ₦2 trillion to ₦1.5 trillion, according to the ministry.

“These are the result of reforms working, not a sign of fiscal distress,” the statement said.

Nevertheless, the figures show that interest payments continued to exceed reported federal revenue during the first half of 2026, even as revenue collections improved.

The ministry’s position is that the direction of change, particularly the faster growth in revenue compared with interest costs, should be considered alongside the absolute figures.

FG says full-year assessment is more appropriate

The Finance Ministry also cautioned against using a six-month snapshot as a definitive measure of Nigeria’s debt sustainability.

It argued that debt sustainability should be assessed on a full-year basis, taking into account the timing of revenue collections and the government’s overall fiscal position.

The ministry cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.

It described the projection as a more appropriate benchmark for assessing the government’s debt obligations.

However, the two figures measure different things. The 124 per cent figure refers to interest payments relative to reported federal revenue in the first half of 2026, while the 46 per cent projection covers total debt service, including both interest and principal, over the full year.

The ministry’s comparison therefore highlights the importance of distinguishing between half-year interest costs and full-year debt-service projections when interpreting public finance data.

The World Bank’s reported figures also reflect the pressure that debt interest payments continue to place on federal finances, particularly as the government seeks to fund infrastructure, public services and other development priorities.

Ministry defends legality of borrowing

The ministry further defended the government’s borrowing practices, insisting that all federal borrowing was lawful and approved.

It said borrowing falls within limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

According to the statement, the government conducts its borrowing in compliance with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003.

It added that information on federal borrowing is published regularly by the Debt Management Office.

The ministry maintained that the legal and institutional framework governing borrowing provides the basis for the government’s debt management activities.

It also welcomed scrutiny of public finances but urged analysts and commentators to ensure that figures were compared on a consistent basis and interpreted within their appropriate context.

The statement called for greater care in analysing fiscal data, particularly where figures cover different tiers of government, reporting periods or categories of expenditure.

Debate over debt burden continues

The ministry’s clarification adds to the debate over Nigeria’s debt burden, revenue mobilisation and the fiscal impact of the government’s economic reforms.

While the government points to the faster growth in revenue and the decline in the half-year ratio from 156 per cent to 124 per cent, the reported ₦7.7 trillion interest bill remains a significant feature of the country’s fiscal position.

The central issue is not only how much revenue the government generates, but also how much of that revenue is available for capital projects, public services and other expenditure after meeting debt obligations.

The distinction between interest payments and total debt service is equally important because principal repayments and interest costs have different implications for government cash flow and financing requirements.

The ministry’s statement seeks to place the latest figures within a broader fiscal context, arguing that the first-half ratio should not be treated as a complete measure of annual debt sustainability.

Its position is that revenue growth, the timing of collections, the scope of government obligations and full-year projections must all be considered in assessing Nigeria’s debt position.

The World Bank figures, however, show that interest payments exceeded reported federal revenue in the first six months of 2026, making the relationship between revenue growth and borrowing costs a continuing issue for the country’s public finances.