FG Rejects World Bank’s 124% Debt Burden Figure, Cites Rising Revenue

The Federal Government has rejected the World Bank’s assessment that debt servicing consumed 124 per cent of its revenue in the first half of 2026, insisting that the figure presents an incomplete picture of the country’s fiscal position.

The World Bank had reported the 124 per cent debt servicing-to-revenue ratio in its latest Nigeria Development Update (NDU).

But the Federal Ministry of Finance, in a statement yesterday, argued that the calculation was misleading because it included interest payments on debts serviced by the Federal Government for other tiers of government, including external loans owed by states, while measuring those obligations against federal revenue alone.

The ministry maintained that such a comparison overstated the ratio because the debt obligations and revenue figures did not cover the same level of government.

“This conclusion is misleading, for three reasons,” the government said.

It explained that the revenue figure used in the analysis also excluded independent revenue already earned by government agencies and enterprises but not yet transferred to the Treasury.

The ministry further noted that revenue collection typically rises in the second half of the year because some tax payments are statutorily due during that period.

To support its position, the government cited the 2025 figures, when the ratio reportedly stood at 156 per cent in the first half but dropped below 60 per cent for the full year. It also said the full-year ratio had fallen from 97 per cent before the administration’s reforms.

According to the ministry, the figures indicate that the government’s reforms are improving fiscal performance.

Revenue rises 72%, interest payments grow 38%

The ministry also highlighted an increase in federal revenue between January and June 2025 and the corresponding period in 2026.

It said revenue climbed by 72 per cent, from N3.6 trillion to N6.2 trillion, while interest payments increased by 38 per cent, from N5.6 trillion to N7.7 trillion.

The government argued that the faster growth in revenue was helping to ease the pressure of interest payments on public finances.

Consequently, the interest-to-revenue ratio declined from 156 per cent in the first half of 2025 to 124 per cent in the first half of 2026, representing a 32-percentage-point reduction.

The gap between interest costs and revenue also narrowed from N2 trillion to N1.5 trillion.

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

FG points to 46% full-year debt service projection

The Federal Government also questioned the use of six-month figures as a basis for drawing conclusions about the sustainability of Nigeria’s debt.

It maintained that a full-year assessment was more appropriate and cited the World Bank’s own projection that Nigeria’s total debt service, including interest and principal repayments, would amount to 46 per cent of revenue in 2026.

“This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement said.

The ministry further insisted that the Federal Government’s borrowing remained within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

It said borrowing activities complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that the Debt Management Office regularly published relevant information.

Ministry urges careful interpretation of fiscal data

While acknowledging the importance of scrutiny of public finances, the ministry urged financial analysts and commentators to examine government revenue and debt obligations using consistent measures.

It argued that comparisons should account for the different levels of government involved and consider the timing of revenue collection before conclusions are drawn about fiscal sustainability.

“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,” the ministry stated.

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