Wellington Jopelo
The Federal Government has disputed the World Bank’s assessment that Nigeria spent 124 per cent of its federal revenue on interest payments in the first half of 2026, arguing that the figure does not capture the full picture of the country’s revenue performance and debt obligations.
The disagreement centres on the interpretation of federal revenue and interest payments between January and June, after the World Bank reported that the Federal Government generated ₦6.2 trillion in revenue while spending ₦7.7 trillion on interest payments, leaving a shortfall of ₦1.5 trillion.
The Ministry of Finance maintained that the figures should be interpreted with caution, insisting that the calculation combines obligations that do not belong exclusively to the Federal Government with a revenue figure that does not reflect every relevant source of income.
According to the ministry, part of the interest payments covers external loans serviced on behalf of state governments. It argued that including such obligations while comparing them with federal revenue alone produces a ratio that may exaggerate the pressure on the Federal Government’s finances.
The ministry also pointed to revenue earned independently by government agencies and enterprises but not yet remitted to the Treasury, as well as the seasonal pattern of tax collections, to explain why first-half figures may not fully represent the government’s annual fiscal position.
To reinforce its position, the ministry compared the first halves of 2025 and 2026. It said federal revenue increased from ₦3.6 trillion to ₦6.2 trillion, representing growth of 72 per cent, while interest payments rose from ₦5.6 trillion to ₦7.7 trillion, an increase of 38 per cent.
On that basis, the ministry said the interest-to-revenue ratio declined from 156 per cent in the first half of 2025 to 124 per cent in the same period of 2026. It added that the difference between interest payments and revenue narrowed from ₦2 trillion to ₦1.5 trillion.
The government sees the figures as evidence that revenue is expanding faster than interest costs, although the reported ratio still indicates that interest payments exceeded the revenue figure used in the comparison during the period.
The ministry further argued that the country’s debt position should be assessed using full-year data. It cited a World Bank projection that total debt service, including interest and principal repayments, would account for 46 per cent of revenue in 2026.
On borrowing, the government said its financing activities remained within limits approved by the National Assembly under the 2026 Appropriation Act and the authorised borrowing plan. It also maintained that its borrowing programme was guided by the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003.
The dispute highlights a wider challenge in evaluating Nigeria’s public finances: rising revenue does not automatically eliminate pressure from debt obligations, while differences in the scope and timing of revenue and expenditure figures can affect how the debt burden is presented.
The World Bank’s figures underline the strain that interest payments place on the government’s available resources. The Finance Ministry, however, insists that a fair assessment must account for the different tiers of government, additional revenue sources and the full annual fiscal cycle.