FG Disagrees With World Bank Over N7.7trn Interest Payments

By Adedapo Adesanya

The federal government has disagreed with the World Bank’s assessment of Nigeria’s N7.7 trillion interest payments in the first half of 2026, describing the analysis as misleading.

The Federal Ministry of Finance stated its position in a statement issued on Sunday and shared on X by the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele.

The disagreement followed the World Bank’s October 2026 Nigeria Development Update (NDU), which reported that Nigeria’s debt servicing-to-revenue ratio stood at 124 per cent in the first half of the year.

However, the ministry argued that the assessment relied on incomplete revenue figures and included debt obligations serviced by the federal government on behalf of other tiers of government, including external loans to states.

“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 per cent of revenue in the first half of 2026. This conclusion is misleading, for three reasons,” the statement said.

According to the ministry, comparing debt obligations covering multiple tiers of government with federal revenue alone overstates the ratio, which it said is meaningful only when debt and revenue figures cover the same level of government.

It also argued that the revenue figure used in the assessment excluded income already earned by government agencies and enterprises but not yet remitted to the Treasury.

The ministry added that statutory payment schedules meant that some taxes were collected predominantly in the second half of the year, making first-half revenue an incomplete basis for assessing annual debt obligations.

It cited the debt service-to-revenue ratio of 156 per cent recorded in the first half of 2025, compared with a full-year ratio below 60 per cent, down from 97 per cent before the government’s reforms.

“This is a clear sign of the progress delivered by the current administration’s reforms,” the ministry stated.

It further disclosed that federal revenue increased by 72 per cent between the first half of 2025 and the corresponding period in 2026, rising from N3.6 trillion to N6.2 trillion.

Over the same period, interest payments rose by 38 per cent, from N5.6 trillion to N7.7 trillion.

“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 per cent to 124 per cent, and the gap between interest and revenue narrowed from N2.0 trillion to N1.5 trillion. This is the result of reforms working, not a sign of fiscal distress,” it said.

The ministry maintained that debt sustainability should be assessed on a full-year basis rather than over six months, citing the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal payments, would account for 46 per cent of revenue.

“This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement added.

The Federal Ministry of Finance also said all federal borrowing remained within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

It added that borrowing was conducted in compliance with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, with details regularly published by the Debt Management Office.

“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 said.