The Federal Ministry of Finance has defended Nigeria’s debt position, saying federal revenue grew faster than interest payments in the first half of 2026, despite interest costs remaining above revenue.
In a press release issued in Abuja on Sunday, October 18, the ministry challenged claims based on the World Bank’s October 2026 Nigeria Development Update that Federal Government interest payments reached 124 per cent of revenue between January and June.
The ministry described the conclusion as misleading, arguing that the figures used an incomplete revenue base and included debt obligations serviced by the Federal Government on behalf of other tiers of government.
It said the calculation included external loans to states, while the revenue figure excluded independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury.
According to the ministry, the timing of tax payments also affects the half-year figures, with more revenue typically collected in the second half of the year.
It cited the 2025 figures as an example, saying the interest-to-revenue ratio stood at 156 per cent in the first half of that year, while the full-year debt-service-to-revenue ratio fell below 60 per cent, compared with 97 per cent before the reforms.
The ministry said federal revenue rose by 72 per cent, from N3.6 trillion in the first half of 2025 to N6.2 trillion in the corresponding period of 2026.
Interest payments, however, increased by 38 per cent, from N5.6 trillion to N7.7 trillion over the same period.
It said the difference in growth rates reduced the interest-to-revenue ratio by 32 percentage points, from 156 per cent to 124 per cent, while the gap between interest payments and revenue narrowed from N2 trillion to N1.5 trillion.
“Revenue is therefore growing almost twice as fast as interest costs,” the ministry said.
It added: “This is the result of reforms working, not a sign of fiscal distress.”
The ministry also cautioned against using half-year figures to assess the country’s debt sustainability, arguing that the assessment should be based on full-year data.
It said the World Bank’s report projected Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, at 46 per cent of revenue.
“Debt sustainability is assessed on a full-year basis, not over six months,” the ministry said, describing the projected full-year ratio as the appropriate benchmark for evaluating the country’s debt position.
The ministry also defended the legality of the Federal Government’s borrowing, saying all loans fell within limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
It said borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that details were regularly published by the Debt Management Office.
While welcoming scrutiny of public finances, the ministry urged analysts and commentators to consider the context behind the figures.
“We encourage analysts and commentators 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,” it said.
Faridah Abdulkadiri
Follow us on:
