Nigeria Debt Interest Hits 124% of Revenue as Finance Ministry Disputes World Bank
Nigeria debt interest reached N7.7trn in H1 2026, 124% of federal revenue, says the World Bank. The Finance Ministry says the comparison misleads.
Nigeria's federal government spent N7.7 trillion on interest in the first half of 2026, while federal revenue for the same six months came to N6.2 trillion. That puts the Nigeria debt interest bill at 124.2% of revenue, according to the World Bank's latest Nigeria Development Update, titled Beyond the Federal Purse.
The Finance Ministry pushed back in a statement on October 18, saying the comparison overstates the strain. The dispute lands at an awkward moment: Nigeria has not published a quarterly budget implementation report since the third quarter of 2025, BusinessDay reported on Monday, so outsiders have little official data to settle the argument.
What the World Bank found on Nigeria debt interest
The World Bank's half-year numbers, as reported by BusinessDay's Wasiu Alli, show revenue growing fast but not fast enough to catch up with debt costs.
- Federal revenue rose 72.2% year on year to N6.2 trillion.
- Interest payments rose 37.5% to N7.7 trillion.
- Total federal spending rose 10.3% to N16.1 trillion.
- Capital spending fell to N700 billion.
- Interest and personnel costs together took about 73.9% of all spending.
- The federal deficit narrowed to N9.9 trillion, from N11 trillion in the first half of 2025.
There is good news in the same report. The bank says the economy grew 4.2% in the first half of 2026 and that the poverty rate stabilised for the first time since 2019. Its recommendation is to cut back on expensive borrowing, seek more concessional loans and push out debt maturities.
The Finance Ministry's case
The ministry does not dispute the headline numbers so much as how they are framed. Its October 18 statement makes four main points:
- The interest figure is inflated by other people's debt. It includes loans the federal government services on behalf of other tiers of government, including external loans on-lent to states.
- The revenue figure is incomplete. It leaves out earnings of agencies and government enterprises that had not yet been remitted to the Treasury.
- Half-year comparisons mislead. Revenue usually rises in the second half because some major taxes fall due later in the year.
- The trend is improving. The interest-to-revenue ratio fell from 156% to 124%, which the ministry credits to fiscal reforms. It says full-year 2025 debt service was below 60% of revenue, against 97% before the current administration's reforms, and points out that the World Bank itself projects full-year 2026 debt service at 46% of revenue.
The ministry also says all borrowing stays within limits approved by the National Assembly and the debt management laws.
How big is the debt stock?
Figures from the Debt Management Office put Nigeria's total public debt at N166.8 trillion at the end of June 2026. The federal government accounts for N152.7 trillion, or about 92%. The 36 states and the Federal Capital Territory owe the remaining N14.1 trillion.
That split matters for the argument above. If a slice of federal interest is really paid on behalf of states, the federal ratio looks worse than the federal government's own position. But the money still leaves the federal purse first, and the states' share of the total stock is small.
Why the missing budget reports matter
The Fiscal Responsibility Act of 2007 requires the government to publish budget execution and performance reports within 30 days of the end of each quarter. None has appeared since the third quarter of 2025, according to BusinessDay.
Without them, the World Bank's half-year snapshot is one of the few detailed public accounts of federal finances in 2026. CFG Advisory said federal revenue came in 64.4% below its straight-line half-year budget projection, and called for an audit of how far the Finance Ministry and the Budget Office comply with the act.
For bond investors, missing data is a cost in itself. It makes revenue surprises harder to spot early, and it leaves the market leaning on multilateral reports and the DMO's quarterly debt figures.
Interest versus schools and hospitals
BusinessDay set the interest bill against the 2026 budget. Education was allocated N3.52 trillion and health N2.48 trillion, a combined N6 trillion. Six months of interest was N1.7 trillion more than that. The comparison is not like for like, since the budget lines cover a full year, but it shows the scale of the squeeze.
What analysts say
Matilda Adefalujo, an economic research analyst at Meristem, said debt servicing is pulling resources away from development priorities, and that weak public investment could hold back productivity and growth. In her words, the government is "spending more than it earns" to meet existing obligations.
SBM Intelligence made a similar point about revenue. Better collection has not bought the government more room, it said, because "stronger collections are running into an increasingly expensive debt structure."
The International Monetary Fund raised the same concern on October 14, warning that rising interest bills are becoming an inflexible burden that leaves less room for investment and social spending. The Fund recently raised its 2026 growth forecast for Nigeria to 4.2%, a move we reported last week.
What to watch next
- Second-half revenue. The ministry's argument rests on stronger collections later in the year. Third-quarter numbers, if published, will test it.
- Quarterly budget reports. A return to regular publication would let investors check the competing claims directly.
- Borrowing mix. A shift toward concessional loans and longer maturities, as the World Bank recommends, would show up in DMO data before it shows up in the interest bill.
- Rates. With inflation easing, lower domestic yields would cut the cost of new naira borrowing over time, though most of the existing stock was issued at higher rates.
The two sides agree on the direction: revenue is growing faster than interest costs. Where they differ is how close Nigeria is to the point where debt service stops crowding out everything else. Until the budget reports return, that argument will be settled by half-year snapshots and press statements.
