The Federal Government has rejected the World Bank’s claim that its debt servicing in the first half of 2026 amounted to 124 percent of its revenue, describing the conclusion as misleading.
In its latest Nigeria Development Update (NDU), the World Bank reported that federal debt servicing exceeded government revenue by that margin.
In a statement yesterday, the Federal Ministry of Finance said the analysis was flawed because the debt servicing figure includes obligations of state governments, and should not be measured against federal revenue alone.
The ministry gave three reasons for its position.
First, it said the interest figure covers debt the Federal Government services 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 statement said.
Second, it argued that the reported revenue is incomplete, as it excludes independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
Third, it said more revenue is typically earned in the second half of the year because of the statutory timing of certain tax payments. According to the ministry, this explains why the ratio stood at 156 percent in H1 2025, while the full-year 2025 ratio was below 60 percent, down from 97 percent before the reforms. It described this as a clear sign of progress under the current administration’s reforms.
The ministry said federal revenue rose by 72 percent between H1 2025 and H1 2026, from ₦3.6 trillion to ₦6.2 trillion, while interest payments rose by a slower 38 percent, from ₦5.6 trillion to ₦7.7 trillion.
Revenue is therefore growing almost twice as fast as interest costs, it said. As a result, the interest-to-revenue ratio fell by 32 percentage points in one year, from 156 percent to 124 percent, while 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 said.
The ministry added that debt sustainability is assessed on a full-year basis, not over six months. It noted that the same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 percent of revenue, which it called the appropriate benchmark.
It also stated that all federal borrowing falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan. According to the ministry, borrowing complies fully with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, and is published regularly by the DMO.
“The Ministry welcomes informed scrutiny of public finances. We encourage 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,” the statement concluded.
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