Nigeria spent ₦7.7 trillion on interest payments in the first half of 2026, up from ₦5.6 trillion recorded in the same period of 2025, as high domestic borrowing costs continued to weigh on government finances, according to the World Bank.
The interest bill amounted to 124.19 per cent of the Federal Government’s revenue during the six-month period, highlighting the pressure debt servicing is placing on public finances.
In its 2026 Nigeria Development Update (NDU), titled ‘Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities,’ the World Bank said interest payments rose from 2.5 per cent of gross domestic product in the first half of 2025 to 3.1 per cent in the corresponding period of 2026.
The increase came despite an improvement in federal revenue, which climbed to ₦6.2 trillion, representing 2.5 per cent of GDP, from ₦3.6 trillion, or 1.6 per cent of GDP, a year earlier.
“Federal revenues rose to about 2.5 percent of GDP (₦6.2 trillion), from 1.6 percent of GDP (₦3.6 trillion) a year earlier, supported by a recovery in oil receipts, stronger corporate tax collections, and higher independent revenues, while customs revenues held stable and VAT collections stayed comparatively flat,” World Bank said.
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The report attributed the higher interest burden to elevated domestic borrowing costs, while also highlighting a significant decline in reported capital expenditure.
“Interest payments increased to 3.1 percent of GDP (₦7.7 trillion) from 2.5 percent (₦5.6 trillion) amid high domestic borrowing costs. Reported capital spending fell to 0.3 percent of GDP (₦0.7 trillion) from 1.0 percent while other expenditure remained at 1.3 percent.”
The World Bank also reported a slight decline in the federal government’s overall expenditure as a share of the economy, despite an increase in its nominal spending.
Total expenditure stood at ₦16.1 trillion, equivalent to 6.5 per cent of GDP, compared with ₦14.6 trillion, or 6.6 per cent of GDP, in the first half of 2025.
Meanwhile, personnel costs increased to ₦4.2 trillion from ₦3.7 trillion following wage adjustments. However, personnel spending remained unchanged at 1.7 per cent of GDP.
The figures show that although federal revenue improved during the period, rising interest payments continued to absorb a substantial share of available resources, while reported capital spending declined sharply.