The Ministry of Finance says the World Bank’s recent analysis of the federal government’s interest payments includes debt serviced by the federal government on behalf of other tiers of government, including external loans to states.
The World Bank’s October 2026 Nigeria Development Update had
said the federal government’s interest payments reached 124 percent of revenue
in the first half (H1) of 2026.
In a statement on Sunday, the ministry said comparing the figure with federal revenue
alone overstates the ratio, describing the figure as misleading.
“The Federal Ministry of Finance has noted recent analysis
and public commentary which, citing the World Bank’s October 2026 Nigeria
Development Update, claims that Federal Government interest payments reached
124% of revenue in the first half of 2026. This conclusion is misleading, for
three reasons,” the statement reads.
The ministry said the World Bank report “compares mismatched
figures against an incomplete revenue base”.
MINISTRY: WORLD BANK FIGURES INCLUDE STATES’ EXTERNAL
LOANS
According to the statement, the interest figure includes
debt serviced by the federal government on behalf of other tiers of government,
including external loans to states.
“Measuring this against federal revenue alone overstates the
ratio which is only meaningful when debt and revenue cover the same level of
government,” the ministry said.
“The reported revenue is also incomplete. It excludes
independent revenue already earned by government agencies and enterprises but
not yet remitted to the Treasury.
“In addition, more revenue is typically earned in the second
half of the year than in the first due to the statutory timing of certain tax
payments.
“This is why the ratio stood at 156% in H1 2025, while the
full-year 2025 debt-service-to-revenue ratio was below 60%, down from 97%
before the reforms. This is a clear sign of the progress delivered by the
current administration’s reforms.”
The ministry said even on the same calculation, the position
has improved significantly.
“Between the first half of 2025 and the first half of 2026,
federal revenue rose by 72%, from ₦3.6 trillion to ₦6.2 trillion. Interest
payments rose by a much slower 38%, from ₦5.6 trillion to ₦7.7 trillion,” the
ministry said.
“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. This is the
result of reforms working, not a sign of fiscal distress.”
The statement added that a half-year snapshot is not a
measure of debt sustainability.
The ministry said debt sustainability should be assessed on
a full-year basis rather than over six months, adding that the same World Bank
report projects Nigeria’s full-year 2026 debt service, covering both interest
and principal, at 46 percent of revenue.
According to the statement, this is the appropriate
benchmark and a guide to avoiding invalid conclusions.
The ministry added that all borrowing is 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,” the statement reads.
“All borrowing is conducted in full compliance with the
Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment)
Act 2003, and is published regularly by the Debt Management Office.”
The ministry welcomed informed scrutiny of public finances,
adding that it encouraged analysts and commentators to apply the same rigour
they seek “to hold the government to: compare like with like, read figures in
context, and seek clarification where the data is unclear”.
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