FG Challenges World Bank Over ₦7.7tn Interest Payments, Defends Debt Position

The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, describing as misleading the calculation that interest payments consumed 124 per cent of federal revenue in the first half of 2026. The Federal Ministry of Finance said the assessment did not adequately account for revenue collected across government agencies or distinguish between federal debt obligations and loans serviced by the Federal Government on behalf of state governments. The dispute followed the World Bank’s October 2026 Nigeria Development Update, which reported that Nigeria spent ₦7.7tn on interest payments between January and June 2026, compared with federal revenue of ₦6.2tn during the same period. Based on those figures, interest payments exceeded revenue by ₦1.5tn, representing approximately 124.2 per cent of the reported earnings. However, in a statement issued on Sunday and shared by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, the ministry argued that the figures did not provide a complete picture of the country's fiscal position. FG Questions World Bank's Calculation The ministry maintained that comparing interest obligations involving multiple tiers of government against federal revenue alone could overstate the pressure on the Federal Government's finances. According to the ministry, some of the interest payments included debts serviced by the Federal Government on behalf of state governments, particularly external loans obtained by subnational authorities. It argued that a meaningful assessment should compare revenue and debt obligations covering the same level of government. The ministry also disputed the revenue figure used in the calculation, saying it excluded independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury. It further explained that certain tax payments are concentrated in the second half of the year because of statutory collection schedules, making a six-month revenue figure an incomplete basis for judging the government's annual debt position. The ministry therefore rejected the conclusion that the reported ratio, by itself, demonstrated that Nigeria's debt had become unsustainable. Revenue Growth Outpaces Interest Payments, FG Says To support its position, the ministry compared revenue and interest payments in the first halves of 2025 and 2026. It said federal revenue increased from ₦3.6tn in the first half of 2025 to ₦6.2tn in the corresponding period of 2026, representing growth of approximately 72 per cent. Interest payments also increased, rising from ₦5.6tn to ₦7.7tn, an increase of about 38 per cent. According to the ministry, the difference in growth rates showed that revenue was increasing faster than interest costs. It added that the interest-to-revenue ratio declined from approximately 156 per cent in the first half of 2025 to 124 per cent in the first half of 2026. The ministry also said the gap between interest payments and revenue narrowed from ₦2tn to ₦1.5tn over the same period. It attributed the changes to the administration's economic and fiscal reforms, arguing that the figures should be considered alongside improvements in revenue collection rather than viewed in isolation. FG Points to Full-Year Debt Projections The ministry also questioned the use of a six-month snapshot as the principal basis for assessing debt sustainability. Citing the World Bank's own projections, it said Nigeria's full-year 2026 debt service, covering both interest and principal repayments, was projected at 46 per cent of revenue. The government argued that the full-year measure offered a more appropriate basis for assessing the country's debt-service burden. It further cited a full-year 2025 debt-service-to-revenue ratio below 60 per cent, compared with 97 per cent before the current administration's reforms. The ministry presented the figures as evidence that the government's fiscal position had improved, despite the increase in nominal interest payments. However, the 46 per cent projection covers both interest and principal repayments over a full year, while the 124 per cent figure relates to interest payments against reported revenue during the first six months of 2026. The two measures therefore cover different periods and debt-service components. Government Defends Borrowing Programme Beyond the revenue dispute, the ministry defended the Federal Government's borrowing programme, insisting that loans obtained by the current administration were lawful and properly approved. It said government borrowing remained within the limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan. The ministry also cited compliance with the Fiscal Responsibility Act of 2007 and the Debt Management Office (Establishment) Act of 2003. It maintained that details of Nigeria's debt obligations were regularly published by the Debt Management Office and encouraged analysts to examine the figures in their proper fiscal context. The government said it welcomed scrutiny of public finances but urged commentators to compare figures covering equivalent government revenue and debt obligations. World Bank Loan Repayment Obligations The disagreement comes amid continued public attention on Nigeria's external borrowing and the repayment schedules attached to recent World Bank facilities. A separate report by The PUNCH said Nigeria would begin repaying the principal on a $1.25bn World Bank loan in December 2031, with the final instalment on one of the facilities due in June 2060. The financing comprises a $750m concessional credit from the International Development Association and a $500m loan from the International Bank for Reconstruction and Development. The loan supports reforms relating to access to credit, electricity supply, trade competitiveness and domestic revenue mobilisation. According to the financing agreements reviewed by The PUNCH, both facilities have principal repayments scheduled to begin on December 15, 2031, although their final maturity dates differ. The arrangements illustrate the long-term repayment obligations associated with external financing, even where principal repayments begin several years after a loan is approved. While the Federal Government has challenged the interpretation of the World Bank's first-half figures, the debate over revenue collection, interest costs and repayment commitments continues to shape discussions about Nigeria's fiscal outlook. The central issue remains how effectively the government can expand revenue, meet its debt obligations and preserve sufficient resources for infrastructure and essential public services.