The Federal Government has challenged the World Bank’s 124% interest-to-revenue ratio for H1 2026, arguing that state loans and unremitted agency revenues distort the comparison.
The Federal Ministry of Finance says the World Bank’s recent analysis of the federal government’s interest payments includes debt the federal government services on behalf of other tiers of government, including external loans to states.
The World Bank’s October 2026 Nigeria Development Update said the federal government’s interest payments reached 124 percent of revenue in the first half (H1) of 2026.
In a statement issued on Sunday, October 18, the ministry said comparing the interest figure with federal revenue alone overstates the ratio. It described the 124 percent figure as misleading.
“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% of revenue in the first half of 2026. This conclusion is misleading, for three reasons,” the statement reads.
What the World Bank Reported
The World Bank report, titled “Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities,” said interest payments rose to ₦7.7 trillion in H1 2026 from ₦5.6 trillion in the same period of 2025. Against federal revenue of ₦6.2 trillion, that is about 124 percent. The bank also said interest payments rose to 3.1 percent of gross domestic product (GDP) from 2.5 percent a year earlier.
The Ministry’s Three Objections
The ministry said the World Bank report “compares mismatched figures against an incomplete revenue base.”
First, it said the interest figure includes debt serviced by the federal government 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,” it said.
Second, it said the reported revenue is incomplete. “It excludes independent revenue already earned by government agencies and enterprises but not yet remitted to the Treasury,” the statement said.
Third, it said more revenue is typically earned in the second half of the year than in the first, because of the statutory timing of certain tax payments. “This is why the ratio stood at 156% in H1 2025, while the full-year 2025 debt-service-to-revenue ratio was below 60%, down from 97% before the reforms. This is a clear sign of the progress delivered by the current administration’s reforms,” it said.
“Revenue Is Growing Almost Twice as Fast”
The ministry said that even on the World Bank’s own calculation, the position has improved significantly.
“Between the first half of 2025 and the first half of 2026, federal revenue rose by 72%, from ₦3.6 trillion to ₦6.2 trillion. Interest payments rose by a much slower 38%, from ₦5.6 trillion to ₦7.7 trillion,” the statement said.
“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% to 124%, and 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.”
Full-Year View
The ministry said a half-year snapshot is not a measure of debt sustainability, and that sustainability should be assessed over a full year. 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. It said this is the appropriate benchmark.
It added that all borrowing is lawful and approved. “Every naira borrowed by the Federal Government falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan,” the statement reads. It said borrowing complies with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003 and is published regularly by the Debt Management Office.
The ministry said it welcomes informed scrutiny of public finances and urged analysts 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.”
What the Statement Does Not Say
The ministry did not give an alternative H1 ratio or say how much of the ₦7.7 trillion interest bill relates to state loans, according to The Sun. Its own figures, ₦7.7 trillion in interest against ₦6.2 trillion in revenue, match the World Bank’s. The “below 60 percent” figure refers to the full-year 2025 debt-service-to-revenue ratio, not to H1 2026, and should not be read as a corrected version of the 124 percent figure.
The ministry’s statement was part of a broader pushback by the finance minister, Taiwo Oyedele, who has defended his “Nigeria rising” account of the economy at the IMF-World Bank meetings in Thailand.
