The Finance Ministry says the 124 per cent interest-to-revenue ratio presents an incomplete picture of Nigeria’s fiscal position, while a separate $1.25bn World Bank loan will begin principal repayments in 2031.

The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, describing as misleading reports that interest payments consumed 124 per cent of its revenue in the first half of 2026.

The Federal Ministry of Finance said the calculation, based on figures in the World Bank’s October 2026 Nigeria Development Update, did not fully reflect the government’s revenue position or account for differences in the scope of its debt obligations.

The World Bank’s published figures put Federal Government revenue at ₦6.2 trillion and interest payments at ₦7.7 trillion between January and June 2026. An analysis by The PUNCH calculated that interest payments represented approximately 124.2 per cent of revenue, exceeding earnings by ₦1.5 trillion.

The ministry disputed that interpretation in a statement issued on Sunday and shared by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.

It argued that the comparison included debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states, while measuring those obligations against federal revenue alone.

“Measuring this against federal revenue alone overstates the ratio, which is only meaningful when debt and revenue cover the same level of government,” the ministry said.

It also argued that the revenue figure excluded income generated by government agencies and enterprises but not yet remitted to the Treasury. The ministry said statutory payment schedules mean some taxes are collected predominantly in the second half of the year, making first-half figures an incomplete basis for assessing annual debt obligations.

However, the ministry did not provide revised figures for interest payments and revenue or an alternative interest-to-revenue ratio to support its objection.

FG defends Nigeria’s debt-to-revenue position

The ministry maintained that Nigeria’s fiscal position had improved, with revenue growing faster than interest payments.

According to its figures, Federal Government revenue rose by 72 per cent from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the corresponding period of 2026.

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

The ministry said the difference between revenue and interest payments narrowed from ₦2 trillion in the first half of 2025 to ₦1.5 trillion in the first half of 2026. It also said the interest-to-revenue ratio declined from 156 per cent to approximately 124 per cent.

“This is the result of reforms working, not a sign of fiscal distress,” the ministry said.

It further argued that a six-month snapshot should not be treated as a definitive measure of debt sustainability, pointing instead to the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal, would amount to 46 per cent of revenue.

The ministry also said the full-year debt-service-to-revenue ratio had fallen below 60 per cent, compared with 97 per cent before the current administration’s reforms.

These are different measures from the first-half interest-to-revenue ratio. Debt service includes principal repayments as well as interest, while interest payments represent only the cost of borrowing. A proper comparison therefore requires clarity about the period, revenue coverage and debt obligations included in each calculation.

The ministry defended the government’s borrowing programme, saying loans obtained under the current administration had been lawfully approved and remained within the limits authorised by the National Assembly under the 2026 Appropriation Act and approved borrowing plan.

It added that borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, while information on Nigeria’s debt obligations was regularly published by the Debt Management Office.

Nigeria’s $1.25bn World Bank loan repayments begin in 2031

The debate over debt sustainability comes as Nigeria prepares to begin repaying the principal on a separate $1.25 billion World Bank loan in December 2031.

Financing agreements reviewed by The PUNCH show that the facility comprises a $750 million concessional credit from the International Development Association (IDA) and a $500 million loan from the International Bank for Reconstruction and Development (IBRD), both members of the World Bank Group.

The principal repayment schedules for both facilities begin on December 15, 2031, but their maturity dates differ. The IDA credit is scheduled to be fully repaid by June 2051, while the IBRD loan runs until June 2060.

Under the IDA agreement, Nigeria will repay 2.5 per cent of the $750 million credit every six months, equivalent to $18.75 million per instalment, excluding interest and other applicable charges.

The IBRD facility provides for regular principal instalments of approximately $8.6 million every six months, followed by a final payment of about $9.8 million in June 2060.

Combined, the facilities will require principal repayments of approximately $27.35 million every six months between December 2031 and June 2051, or about $54.7 million annually during full repayment years.

These amounts cover principal only and do not represent the total cost of borrowing. The agreements provide for interest and applicable charges, with the eventual cost depending on the relevant rates and contractual provisions.

The loan is intended to support reforms aimed at improving access to credit, expanding electricity supply, strengthening trade competitiveness, improving agricultural productivity and increasing government revenue.

The agreements also contain conditions tied to implementation of the reform programme. The IBRD facility is divided into two withdrawal tranches, with release of the second tranche dependent on satisfactory progress on agreed policy actions and maintenance of an adequate macroeconomic framework.

Debt transparency remains central to Nigeria’s fiscal outlook

The disagreement between the Finance Ministry and the World Bank highlights the importance of consistent and transparent reporting on government revenue, interest costs and debt repayments.

The ministry’s argument raises a question about whether the first-half comparison uses matching revenue and debt figures. Its own data, however, also show that interest payments continued to rise, even as revenue grew faster.

The scheduled repayments on the $1.25 billion facility add another dimension to the debate. Although principal repayments will not begin until 2031, the obligations will extend across several administrations, while interest and other charges will add to the total cost.

The World Bank’s assessment and the ministry’s response therefore need to be considered alongside complete fiscal data, including revenue collected across the relevant levels of government, the cost of servicing debt and the amount available for public spending.

The ministry maintains that reforms have improved Nigeria’s fiscal position. The broader test will be whether revenue growth can be sustained, borrowing costs managed and enough resources preserved for infrastructure and essential public services while the government meets its debt obligations.