The Federal Government has defended its debt management strategy after figures from the World Bank showed that interest payments reached ₦7.7tn, exceeding its reported revenue of ₦6.2tn in the first half of 2026.
The Federal Ministry of Finance described claims that interest payments consumed 124 per cent of federal revenue during the period as misleading, arguing that the figures did not provide a complete picture of the government’s finances.
The clarification was contained in a statement issued on Sunday, October 18, and shared by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, on his X handle.
The ministry’s response followed public commentary based on the World Bank’s October 2026 Nigeria Development Update, which reported the revenue and interest payment figures.
According to the ministry, the calculation failed to account for differences in the scope of the debt obligations and revenue figures used, as well as the timing of government receipts.
It explained that the interest payment figure included debt serviced by the Federal Government on behalf of other tiers of government, including external loans obtained by state governments.
Comparing those obligations with federal revenue alone, it said, overstated the ratio because meaningful comparisons must cover the same level of government.
The ministry also argued that the reported revenue figure was incomplete because it excluded independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury.
It added that government revenue typically increases in the second half of the year because of the statutory timing of certain tax payments.
To support its argument, the ministry cited the first-half figures for 2025, when the interest-to-revenue ratio stood at 156 per cent, compared with a full-year debt-service-to-revenue ratio of less than 60 per cent.
It said the full-year figure represented an improvement from 97 per cent before the current administration’s reforms.
Revenue grows faster than interest payments
The ministry also pointed to an improvement in the year-on-year figures, saying federal revenue increased by 72 per cent between the first halves of 2025 and 2026, rising from ₦3.6tn to ₦6.2tn.
READ ALSO: W/Bank: Nigeria’s Debt Interest Hits ₦7.7tn In H1, Exceeds FG’s Revenue
Interest payments, meanwhile, increased by 38 per cent, from ₦5.6tn to ₦7.7tn over the same period.
According to the ministry, the faster growth in revenue helped reduce the interest-to-revenue ratio by 32 percentage points, from 156 per cent in the first half of 2025 to 124 per cent in the corresponding period of 2026.
It added that the gap between interest payments and revenue narrowed from ₦2tn to ₦1.5tn.
The ministry described these figures as evidence that the government’s reforms were yielding results, rather than indicating fiscal distress.
However, the figures also show that interest payments remained higher than reported federal revenue in the first half of 2026, leaving a gap that the ministry attributed partly to the timing and coverage of the reported receipts.
Ministry cites full-year debt outlook
The ministry further argued that a six-month snapshot should not be used in isolation to determine whether the country’s debt is sustainable.
It said debt sustainability should be assessed using full-year figures, noting that the World Bank’s October 2026 report projected Nigeria’s full-year debt service, covering both interest and principal repayments, at 46 per cent of revenue.
The ministry described the projection as a more appropriate benchmark for assessing the country’s debt position than the first-half interest-to-revenue ratio.
It also defended the legality of the government’s borrowing, stating that every naira borrowed fell within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
According to the ministry, government borrowing complies with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, while details of the borrowing are published regularly by the Debt Management Office.
The ministry said it welcomed scrutiny of public finances but urged analysts and commentators to compare figures on a consistent basis, consider the context and seek clarification where the data was unclear.