Nigeria’s debt burden deepened in the first half of 2026 as the Federal Government spent ₦7.7 trillion on interest payments, surpassing its total revenue of ₦6.2 trillion by 124.2 per cent, according to the World Bank’s latest Nigeria Development Update.
The report, titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities, revealed that interest payments rose by ₦2.1 trillion (37.5 per cent) compared to ₦5.6 trillion in the same period of 2025, driven largely by high domestic borrowing costs.
Although the interest-to-revenue ratio improved from 155.6 per cent in 2025 to 124.2 per cent in 2026, obligations still outpaced government income, leaving limited fiscal space for infrastructure and public services.
Federal revenue grew by ₦2.6 trillion (72.2 per cent), supported by stronger oil receipts, corporate tax collections, and independent revenues.
However, total spending also climbed to ₦16.1 trillion, up from ₦14.6 trillion in 2025. Personnel costs rose to ₦4.2 trillion, while capital expenditure fell sharply to ₦700 billion — just 0.3 per cent of GDP.
This means the government spent 11 times more on interest payments than on capital projects during the six-month period.
The World Bank cautioned that Nigeria’s fiscal improvement was largely due to reduced capital spending rather than sustainable reforms.
It highlighted persistent challenges such as overlapping budget cycles, weak expenditure planning, and poor alignment between allocations and implementation.
Nigeria’s debt stock was estimated at ₦177 trillion in 2025 (40 per cent of GDP), up from ₦67 trillion in 2021, with domestic debt accounting for nearly 58 per cent of the total but generating over 72 per cent of interest costs.
The institution recommended limiting expensive borrowing, prioritising concessional financing, and extending debt maturities to ease refinancing risks.
It also urged stronger revenue mobilisation and fiscal discipline to prevent debt obligations from further constraining development spending.
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