· Faults lender’s reliance on ½ year revenue figures to assess fiscal health
· Puts 2026 full-year debt service at 46% of revenue
By Lanre Ige
The Federal Government, yesterday, challenged the World Bank’s assessment of Nigeria’s debt burden, arguing that the reported ratio of interest payments to revenue in the first half of 2026 does not fully reflect the country’s fiscal position.
The Ministry of Finance said the reported 124 per cent ratio, which indicates that federal interest payments exceeded revenue for the six-month period, was misleading because it relied on incomplete revenue figures and did not account adequately for seasonal variations in government receipts.
The World Bank’s October 2026 Nigeria Development Update reported that the Federal Government’s interest payments rose to ₦7.7 trillion in the first half of 2026, compared to revenue of ₦6.2 trillion, leaving a shortfall of ₦1.5 trillion.
In a statement issued on Sunday, the ministry said the calculation did not capture all revenue available to the government, including earnings generated by independent agencies but not yet remitted into the relevant accounts.
It also argued that the interest figure included debt obligations serviced on behalf of subnational governments, including external loans contracted by states.
According to the ministry, these factors make the headline ratio an incomplete measure of the Federal Government’s fiscal performance.
The ministry said revenue increased by 72 per cent, from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the corresponding period of 2026, while interest payments rose by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion.
It added that the interest-to-revenue ratio had declined from 156 per cent in the first half of 2025 to 124 per cent in the first half of 2026, while the gap between interest payments and reported revenue narrowed from ₦2 trillion to ₦1.5 trillion.
The ministry maintained that the figures showed an improvement in revenue performance relative to interest costs, although the reported interest bill remained higher than the revenue recorded during the period.
It further argued that the first-half figures should not be treated as a complete representation of the full-year fiscal position because tax receipts typically strengthen in the second half of the year.
The government projected that total debt service, covering both interest payments and principal repayments, would account for 46 per cent of revenue for the full year in 2026.
It also said the full-year debt-service-to-revenue ratio for 2025 was below 60 per cent, compared with 97 per cent before the current administration’s reforms.
However, the ministry’s projected full-year ratio uses a different measure from the World Bank’s first-half calculation.
The World Bank’s 124 per cent figure compares interest payments with revenue for the first six months of 2026, while the ministry’s 46 per cent projection covers total debt service, including principal repayments, against full-year revenue.
The two ratios therefore cannot be directly compared without accounting for the different periods and measures used, the ministry said.
The ministry also defended the government’s borrowing programme, saying borrowing had been undertaken within approved limits and in accordance with applicable laws and authorizations by the National Assembly.
However, experts yesterday said, despite the federal government’s defence, the reported figures underscore the pressure that debt interest payments continue to place on federal finances.
Interest costs of ₦7.7 trillion exceeded the ₦6.2 trillion in revenue recorded in the first half of the year, highlighting the importance of stronger revenue mobilisation and effective management of public debt.
The ministry said the government expected improved receipts in the second half of the year to reduce the overall debt-service burden as a proportion of revenue.