Nigeria’s debt interest hits 124% Exceeds Revenue

The Federal Government spent N7.7tn on interest payments in the first half of 2026, representing 124.2 per cent of its total revenue of N6.2tn during the period, according to the World Bank.

The figures indicate that interest payments alone exceeded the government’s revenue by N1.5tn between January and June 2026, raising concerns about Nigeria’s debt burden despite improved revenue collections.

The findings were contained in the World Bank’s October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities, obtained by The PUNCH.

The report showed that interest payments increased by N2.1tn, or 37.5 per cent, from N5.6tn recorded in the corresponding period of 2025, largely due to elevated domestic borrowing costs.

According to Punch and the World Bank’s October 2026 Nigeria Development Update, the Federal Government spent N7.7tn on interest payments in the first half of 2026, representing 124.2% of its total revenue of N6.2tn. Interest payments exceeded revenue by N1.5tn between January and June 2026. Interest payments increased by 37.5% from N5.6tn in H1 2025, driven by high domestic borrowing costs. Federal revenue rose 72.2% to N6.2tn, supported by oil receipts, corporate tax and independent revenues. However, capital expenditure declined sharply from 1% of GDP to 0.3% (N700bn), meaning the government spent 11 times more on interest than on reported capital projects. Combined interest and personnel expenditure hit N11.9tn, nearly twice the government’s revenue. Nigeria’s debt stock was estimated at N177tn in 2025, or 40% of GDP, up from N67tn (27.6%) in 2021. The World Bank projected the fiscal deficit to widen from 3.1% of GDP in 2025 to 3.5% in 2026.

It recommended limiting expensive borrowing, prioritising concessional financing and extending debt maturities to reduce refinancing risks.

The World Bank further projected that Nigeria’s consolidated fiscal deficit would widen from 3.1 per cent of GDP in 2025 to 3.5 per cent in 2026, driven partly by rising federal interest, personnel and pre-election spending.

It urged the government to strengthen revenue mobilisation, improve budget credibility and maintain fiscal discipline to prevent debt obligations from further constraining development spending.