FG Rejects Claim That Interest Payments Swallowed 124% of Revenue
By Patience Ikpeme
The Federal Government has dismissed claims that it spent more on interest payments than it earned in the first half of 2026, saying the figures behind the claim are mismatched and that the country’s finances are improving, not worsening.
In a statement issued on Sunday, the Federal Ministry of Finance responded to recent analysis and public commentary, which cited the World Bank’s October 2026 Nigeria Development Update, saying Federal Government interest payments reached 124 percent of revenue in the first six months of the year. The Ministry called that conclusion “misleading” and gave three reasons.
First, the Ministry said the comparison sets the wrong figures side by side. According to the statement, the interest bill includes debt the Federal Government pays on behalf of other tiers of government, including external loans taken for states. Measuring that bill against federal revenue alone, the Ministry argued, “overstates the ratio which is only meaningful when debt and revenue cover the same level of government.”
The Ministry also said the revenue figure used is incomplete. It said the figure leaves out income already earned by government agencies and enterprises but not yet paid into the Treasury. It added that more revenue usually comes in during the second half of the year than the first because of the legal timing of some tax payments. As evidence, it pointed to last year: the ratio stood at 156 percent in the first half of 2025, yet the full-year 2025 ratio of debt service to revenue came in “below 60%,” down from 97 percent before the reforms. The Ministry described this as “a clear sign of the progress delivered by the current administration’s reforms.”
Second, the Ministry argued that even if the 124 percent figure is accepted, the trend is encouraging. Between the first half of 2025 and the first half of 2026, federal revenue rose by 72 percent, from ₦3.6 trillion to ₦6.2 trillion. Over the same period, interest payments rose by a slower 38 percent, from ₦5.6 trillion to ₦7.7 trillion. In plain terms, the government’s income is growing almost twice as fast as the cost of its debt.
As a result, the interest-to-revenue ratio fell by 32 percentage points in one year, from 156 percent to 124 percent. The gap between what the government paid in interest and what it earned also narrowed, from ₦2.0 trillion to ₦1.5 trillion. “This is the result of reforms working, not a sign of fiscal distress,” the statement said.
Third, the Ministry said a six-month snapshot cannot show whether a country’s debt is sustainable. “Debt sustainability is assessed on a full-year basis, not over six months,” it said. It noted that the same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 percent of revenue. The Ministry called this “the appropriate benchmark.”
The Ministry also addressed the legality of government borrowing. It said that “every naira borrowed by the Federal Government falls within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.” It added that all borrowing complies with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, and that the Debt Management Office publishes the details regularly.
The Ministry said it welcomes public scrutiny of government finances but urged those doing the scrutinising to be careful with numbers. “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.
The statement does not deny that interest payments in the first half of 2026 were larger than revenue collected in the same period. By the Ministry’s own figures, the government paid ₦7.7 trillion in interest against ₦6.2 trillion in revenue, leaving a gap of ₦1.5 trillion. Its case rests on the argument that the ratio is falling quickly, that the revenue base is understated, and that the full-year picture will look much healthier. Whether the full-year numbers bear this out will be clear when the year’s accounts are published.
