FG Challenges World Bank’s 124% Debt-to-Revenue Warning, Cites Rising Income

The Federal Government has disagreed with the World Bank’s assessment that its interest payments consumed 124 per cent of revenue in the first half of 2026, describing the calculation as misleading and arguing that it fails to capture the full picture of Nigeria’s public finances.

The dispute followed the World Bank’s October 2026 Nigeria Development Update, which reported that the Federal Government spent ₦7.7 trillion on interest payments between January and June 2026, compared with revenue of ₦6.2 trillion.

The figures imply an interest-to-revenue ratio of approximately 124 per cent, meaning the government’s interest bill exceeded its reported revenue by about ₦1.5 trillion during the six-month period.

However, the Federal Ministry of Finance, in a statement issued on Sunday, October 18, argued that the comparison combined debt obligations covering different tiers of government with a revenue figure that did not include all government earnings.

The ministry said the interest-payment figure included debts serviced by the Federal Government on behalf of other tiers of government, including external loans obtained by state governments.

It argued that comparing these obligations with federal revenue alone overstated the ratio because the figures did not cover the same level of government.

The ministry also said the revenue figure excluded independent income already earned by government agencies and enterprises but not yet remitted to the Treasury.

According to the ministry, the timing of tax collections also affects first-half revenue figures, as some statutory payments are concentrated in the second half of the year. It therefore maintained that a six-month comparison should not be treated as a definitive assessment of Nigeria’s debt sustainability.

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To support its position, the government highlighted an improvement in revenue collection between the first halves of 2025 and 2026.

The ministry said Federal Government revenue increased by 72 per cent, rising from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the corresponding period of 2026.

Interest payments, meanwhile, rose by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion over the same period.

The ministry said the difference between interest payments and revenue consequently narrowed from ₦2 trillion in the first half of 2025 to ₦1.5 trillion in the first half of 2026.

It added that the interest-to-revenue ratio fell from 156 per cent to 124 per cent, a decline of 32 percentage points.

The government attributed the improvement to its economic reforms, arguing that revenue was growing faster than interest costs and that the figures did not, on their own, establish that Nigeria was facing a debt crisis.

The ministry further argued that debt sustainability should be assessed using full-year figures, rather than a six-month snapshot that may not reflect the timing of revenue collection and debt payments.

It cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.

The ministry described the projected full-year ratio as a more appropriate benchmark for assessing the government’s debt obligations.

It also defended the Federal Government’s borrowing programme, insisting that borrowing remained within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

According to the ministry, the government’s borrowing activities comply with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, with debt information published regularly by the Debt Management Office.

Despite the government’s objections, the reported figures highlight the pressure that rising interest costs can place on public finances. When interest payments absorb a large share of government revenue, fewer resources may be available for infrastructure, healthcare, education and other public services.

The central disagreement, therefore, concerns the appropriate basis for measuring Nigeria’s debt burden. While the World Bank’s reported figures point to interest payments exceeding federal revenue in the first half of 2026, the Finance Ministry insists that differences in government coverage and revenue timing make the ratio an incomplete measure of the country’s fiscal position.