Debt-interest burden is 60% of revenue, not 124%, FG clarifies
Federal Ministry of Finance (FMF)
Abdullateef Fowewe
The Federal Ministry of Finance has disputed claims that Nigeria’s interest payments reached 124% of federal revenue in the first half of 2026, saying the figure is misleading because it compares debt-service obligations that include states with federal revenue alone.
The Ministry in a statement on Sunday said the appropriate full-year measure shows debt service at 46% of revenue, while interest payments alone are about 60%.
The dispute follows the World Bank’s October 2026 Nigeria Development Update, which reported that the Federal Government paid ₦7.7 trillion in interest between January and June 2026, against revenue of ₦6.2 trillion—124.2% of revenue.
The Ministry noted the World Bank-derived calculation “compares mismatched figures against an incomplete revenue base.”
“The interest figure includes debt the Federal Government services on behalf of other tiers of government, including external loans to states,” the statement said.
“Measuring this against federal revenue alone overstates the ratio which is only meaningful when debt and revenue cover the same level of government.”
It also argued that the reported revenue excludes independent revenue earned by agencies and enterprises but not yet remitted to the Treasury, and that revenue is usually higher in the second half of the year because of the timing of certain tax payments.
The Ministry acknowledged that interest payments exceeded revenue in the first half, but said the gap had narrowed sharply.
Federal revenue rose 72%, from ₦3.6 trillion in H1 2025 to ₦6.2 trillion in H1 2026, while interest payments rose 38%, from ₦5.6 trillion to ₦7.7 trillion.
“Revenue is therefore growing almost twice as fast as interest costs.
“As a result, the interest-to-revenue ratio fell by 32 percentage points in a single year, from 156% to 124%, and the gap between interest and revenue narrowed from ₦2.0 trillion to ₦1.5 trillion.”
It described the trend as “the result of reforms working, not a sign of fiscal distress.”
The World Bank’s report similarly recorded an improvement in the interest-to-revenue ratio from about 155.6% in H1 2025 to 124.2% in H1 2026, even as interest spending rose in absolute terms.
The Ministry said debt sustainability should be assessed over a full fiscal year rather than from a six-month snapshot.
It cited the same World Bank report’s projection that Nigeria’s full-year 2026 debt service covering interest and principal would equal 46% of revenue.
“This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement said.
The Ministry added that all federal borrowing was lawful and approved, “Every naira borrowed by the Federal Government falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.”
It also welcomed scrutiny of public finances, urging analysts to “compare like with like, read figures in context, and seek clarification where the data is unclear.”
The World Bank has said Nigeria’s fiscal revenues strengthened in 2026, helped by higher oil receipts and federal independent revenues, but warned that high debt-service costs continue to constrain the impact of improved revenues.
