Nigeria Spends ₦7.7 Trillion on Debt Interest in H1 2026 as Payments Exceed Federal Revenue by 24%, World Bank Says
The Federal Government paid more in interest on its debts in the first six months of 2026 than it collected in revenue, according to the latest assessment from the World Bank. Its October 2026 Nigeria Development Update puts interest payments between January and June at ₦7.7 trillion, against total federal revenue of ₦6.2 trillion. That leaves a gap of roughly ₦1.5 trillion, or about 24 per cent. Put another way, interest alone swallowed 124.2 per cent of everything Abuja earned in the period.
The figure is stark, but the report’s details matter as much as the headline. Federal revenue did not collapse. It grew sharply. The World Bank says it rose to ₦6.2 trillion, or 2.5 per cent of GDP, from ₦3.6 trillion, or 1.6 per cent of GDP, a year earlier. That is an increase of about 72 per cent. The bank credits a recovery in oil receipts, stronger corporate tax collections and higher independent revenues. Customs revenue held steady, while VAT collections stayed comparatively flat.
The problem is that the interest bill grew too. Interest payments climbed from ₦5.6 trillion in the first half of 2025 to ₦7.7 trillion this year, a rise of ₦2.1 trillion or 37.5 per cent. As a share of output, they moved from 2.5 per cent of GDP to 3.1 per cent. The World Bank pins the increase on high domestic borrowing costs, which means the pressure comes mainly from what the government pays to borrow naira, not from dollar obligations.
There is a small silver lining in the ratios. In the first half of 2025, interest payments equalled roughly 155.6 per cent of federal revenue. This year’s 124.2 per cent is lower, which shows that faster revenue growth is narrowing the gap even as the absolute interest figure rises. The trend is moving in the right direction. It has not yet crossed the line where revenue covers the interest bill.
The squeeze looks tighter when interest is set beside the rest of the government’s recurring commitments. Personnel costs rose to ₦4.2 trillion from ₦3.7 trillion after wage adjustments. Together, interest and salaries came to ₦11.9 trillion, around 74 per cent of total federal spending of ₦16.1 trillion. Total expenditure rose 10.3 per cent from ₦14.6 trillion a year earlier. With so much of the budget committed before the first naira reaches a road, hospital or school, discretionary room is thin.
That is where the report sounds its sharpest warning. According to published summaries of the findings, the World Bank cautioned that the improvement in Nigeria’s fiscal position owed more to reduced capital spending than to lasting reform. It pointed to overlapping budget cycles, weak expenditure planning and poor alignment between allocations and actual implementation. One report on the findings says the government spent roughly eleven times more on interest than on capital projects over the six months, a comparison that shows how far the balance has tilted.
The wider debt picture explains why the interest line keeps growing. Data from the Debt Management Office show total public debt at ₦166.79 trillion as of June 30, 2026, up from ₦159.35 trillion in March and ₦87.38 trillion in June 2023, shortly after President Bola Tinubu took office. A large part of that rise reflects the naira’s depreciation since 2023, which inflates the local-currency value of dollar-denominated obligations, alongside fresh borrowing. The DMO figure covers the federal government, the 36 states and the Federal Capital Territory, so it is broader than the federal interest bill in the World Bank report.
For context, the DMO reported that Nigeria spent ₦7.8 trillion servicing debt across the whole of 2023. Interest alone has now reached almost that level in a single half-year. The two numbers are not strictly comparable, since debt service includes principal repayments and the World Bank figure refers to interest, but they illustrate how quickly the cost of carrying debt has changed.
Readers who follow Nigerian fiscal data will also notice that different institutions report different ratios, and this is a common source of confusion. The Budget Office, for example, reported earlier that total debt service in the first nine months of 2025 equalled about 67 per cent of retained revenue. That measure counts principal as well as interest and compares it against retained revenue, which is revenue left after statutory deductions. The World Bank’s 124.2 per cent compares interest only against total federal revenue for a different period. The IMF, in its own assessment, projected that interest could absorb a little over 53 per cent of revenue for 2026 as a whole. Each figure answers a slightly different question, so they should not be stacked against each other without checking definitions.
The government’s own reading of the same report is more upbeat. A statement from the Presidency, reported by the News Agency of Nigeria, said the October update confirms that reforms are yielding results. It highlighted the World Bank’s finding that poverty had stabilised for the first time since 2019, economic growth of 4.2 per cent in the first half of 2026, and gross external reserves of $53.8 billion at the end of August, up from $45.5 billion at the end of 2025. The report also projects overall public debt easing from 40.0 per cent of GDP in 2025 to 38.1 per cent in 2026. Those are real gains, and they sit alongside the interest data rather than contradicting it. A country can post respectable growth and a manageable debt-to-GDP ratio while still spending an uncomfortable share of its income on interest. The latter is what the revenue comparison captures.
The political reaction followed quickly. Former Anambra State governor Peter Obi criticised the administration over the figures, arguing that better headline indicators have not translated into better living conditions for ordinary Nigerians. The Presidency, as noted, reads the data differently. Both sides are working from the same numbers and reaching opposite conclusions about what they mean.
Looking ahead, the World Bank expects the consolidated fiscal deficit to widen from 3.1 per cent of GDP in 2025 to 3.5 per cent in 2026. It links that to higher federal interest and personnel costs and to spending ahead of the 2027 elections. That outlook matters because a larger deficit usually means more borrowing, and more borrowing at high domestic rates adds to the interest bill in the following year.
The way out, analysts generally agree, runs through revenue. If collections keep growing faster than interest costs, the ratio will keep falling and eventually dip below 100 per cent. Tax reform, better compliance, steadier oil output and tighter control of spending all feed into that outcome. Lower borrowing costs would help too, though that depends on inflation, monetary policy and investor appetite for Nigerian paper, none of which the Finance Ministry controls alone.
For households and businesses, the practical effect is indirect but real. Money that goes to bondholders is money that does not go to power, transport or health. It also keeps government competing with private firms for naira funding, which can hold up lending rates. How quickly revenue outpaces interest over the next few quarters will say a lot about whether the gains of the past year are durable.
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