World Bank Reports N7.7trn Debt Interest Bill, Exceeding Federal Revenue by N1.5trn

By Jennete Ugo Anya

Nigeria’s debt interest payments rose by 37.5 percent to N7.7 trillion in the first half of 2026, exceeding the federal government’s revenue of N6.2 trillion by N1.5 trillion and intensifying pressure on public finances.

DEVELOPMENT

The World Bank disclosed the figures in its 2026 Nigeria Development Update (NDU), titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities.

The report showed that interest payments increased from N5.6 trillion in the first half of 2025 to N7.7 trillion in the corresponding period of 2026, driven by high domestic borrowing costs.

The increase occurred despite stronger government revenue, which rose by more than 72 percent to N6.2 trillion from N3.6 trillion a year earlier.

The World Bank stated: “Federal revenues rose to about 2.5 per cent of GDP (N6.2 trillion), from 1.6 per cent of GDP (N3.6 trillion) a year earlier, supported by a recovery in oil receipts, stronger corporate tax collections, and higher independent revenues, while customs revenues held stable and VAT collections stayed comparatively flat.”

Meanwhile, reported capital expenditure fell sharply, while total government spending increased to N16.1 trillion from N14.6 trillion. Personnel costs also rose to N4.2 trillion from N3.7 trillion following wage adjustments.

DATA

The World Bank’s figures reveal a widening imbalance in federal finances:

• Debt interest payments: N7.7 trillion, up 37.5 percent from N5.6 trillion.
• Federal revenue: N6.2 trillion, up more than 72 percent from N3.6 trillion.
• Interest-to-GDP ratio: 3.1 percent, compared with 2.5 percent in H1 2025.
• Capital expenditure: N700 billion, equivalent to 0.3 percent of GDP, down from 1.0 percent.
• Total expenditure: N16.1 trillion, compared with N14.6 trillion.
• Personnel costs: N4.2 trillion, up from N3.7 trillion.

SIGNIFICANCE

Interest payments exceeding federal revenue highlight the constraints facing the government in financing infrastructure and development priorities. Although revenue mobilisation improved, the rising cost of debt servicing absorbed resources that could otherwise support capital investment.

The decline in reported capital expenditure to 0.3 percent of GDP raises additional concerns about the balance between recurrent obligations and growth-enhancing public investment.

NEXT MOVE

Investors and policymakers should monitor domestic borrowing costs, revenue performance, debt-servicing trends and the execution of capital projects. The ability to sustain revenue growth while containing financing costs will be central to improving fiscal flexibility.

OUR LENS

Nigeria’s fiscal challenge is no longer simply increasing revenue, but ensuring that additional collections translate into productive public spending. The World Bank’s figures show that stronger receipts have not prevented debt interest from exceeding federal revenue. Sustainable fiscal improvement will require better debt-cost management, stronger revenue quality and sufficient capital investment to support long-term economic growth.

Jennete Ugo Anya is a journalist and researcher with interests across Nigeria’s economy, public policy, business, MSMEs, development and strategic communications, Foreign direct investments, development finance institutions.