FG Disputes World Bank Figure Putting Interest at 124%

Nigeria's Federal Government spent about ₦7.7 trillion on interest in the first half of 2026 while earning about ₦6.2 trillion in revenue, according to the World Bank's October 2026 Nigeria Development Update, which puts interest at roughly 124% of revenue. On Sunday, 18 October, the Federal Ministry of Finance said conclusions drawn from that ratio were "misleading". Both sides use the same two numbers but disagree on what they say about Nigeria's debt. Here is each side's case, what the report shows, and why it matters for T-bill and bond investors.

The numbers both sides use

Amounts are from the World Bank report; the ratios and gap are from the Finance Ministry and match them. We did not find the 124% figure written in the report's text. It comes from dividing ₦7.7 trillion by ₦6.2 trillion, though some outlets reported it as the World Bank's own figure.

The ministry's three objections

In its statement, carried by TheCable, Nairametrics and Punch, the ministry gave three objections:

1. Different levels of government. The interest figure includes debt the Federal Government services on behalf of other tiers, including external loans to states. Comparing that with federal revenue alone "overstates the ratio", it said.
2. Missing revenue. The revenue figure leaves out independent revenue already earned by government agencies and enterprises but not yet paid into the Treasury.
3. Timing. More revenue usually arrives in the second half of the year because of when some taxes fall due. The ministry said the ratio was 156% in the first half of 2025, yet the full-year 2025 debt-service-to-revenue ratio was below 60%, down from 97% before the reforms.

The ministry said the full-year figure is the better measure, and that the same report projects 2026 debt service, interest plus principal, at 46% of revenue. It added that all borrowing stays within limits approved by the National Assembly.

"Revenue is therefore growing almost twice as fast as interest costs," the ministry said. "This is the result of reforms working, not a sign of fiscal distress."

What the World Bank report says about debt

The report, titled "Beyond the Federal Purse: How Higher Revenues Shaped State Priorities", gives a mixed picture:

• Debt level. Total public debt, including states, Ways and Means advances, guarantees and AMCON liabilities, was about ₦177 trillion, or 40% of GDP, in 2025, up from about ₦67 trillion in 2021. The bank says much of the rise came from recognising old Ways and Means advances and naira depreciation, not new borrowing.
• Debt service. Across all tiers of government, total debt service fell to about 49.5% of revenue in 2025, while interest took 27.3%. The bank calls this "a more pressing vulnerability" than the debt level.
• Expensive local borrowing. Domestic debt made up 57.9% of the debt stock in 2025 but 72.6% of interest payments.
• Pressure ahead. The consolidated deficit is expected to widen from 3.1% of GDP in 2025 to 3.5% in 2026 as state capital spending and federal pre-election spending rise.

Where the figures do not line up

Several debt-service numbers are circulating, and they measure different things:

• Below 60% (2025): the ministry's full-year figure. The statement does not say whether it covers only the Federal Government or all tiers.
• About 49.5% (2025): the World Bank's figure for all tiers of government combined.
• 46% (2026): the projection the ministry attributes to the World Bank. We did not find this number in the text of the report we read; it may appear in a chart.
• 124% (H1 2026): federal interest only, against federal revenue only, for six months.

The ratio improved from a year ago, but interest still exceeded federal revenue in the first half. Later budget implementation reports will show whether the full-year figure falls sharply, as the ministry expects.

Why domestic rates matter

Because most interest goes on naira debt, the cost of local borrowing drives the bill. The Central Bank of Nigeria cut its policy rate by 350 basis points to 23% in September. Even so, at the 14 October auction the one-year Treasury bill stop rate rose 5 basis points to 15.90%, and average medium-term FGN bond yields climbed 37 basis points to 16.72% last week, Proshare data show.

What this means for investors

• Fixed-income savers. Heavy government borrowing tends to keep T-bill and bond yields high, which supports savers' returns, but interest then competes with roads and schools for public money.
• Watch the second half. If the ministry is right, federal revenue should rise strongly in the second half. Weak revenue would put more pressure on borrowing and yields.
• Ratings. Rating agencies watch interest-to-revenue closely, and Nigeria is talking to S&P and Moody's about a path to investment grade.
• Election-year risk. The World Bank flags pre-election spending as a deficit risk ahead of the 2027 polls.
• Learn the terms. Gopexly's 18 free Academy lessons explain T-bills, bonds and yields in plain words.

This is for information only and is not investment advice.

FAQ

What does "interest at 124% of revenue" mean?

It means that in the first half of 2026 the Federal Government's interest payments (about ₦7.7 trillion) were larger than its revenue (about ₦6.2 trillion). The difference, along with other spending, is covered mainly by borrowing.

Why does the Finance Ministry call the 124% figure misleading?

It says the interest figure includes debt serviced for states, the revenue figure leaves out unremitted agency revenue, and revenue is usually higher in the second half of the year, so a six-month ratio exaggerates the problem.

How big is Nigeria's public debt?

The World Bank puts total public debt, across all tiers and including some liabilities such as AMCON and guarantees, at about ₦177 trillion, or 40% of GDP, in 2025.

Sources

• World Bank, Nigeria Development Update, October 2026: "Beyond the Federal Purse" (PDF)
• TheCable, "FG faults World Bank's 124% interest-to-revenue ratio over inclusion of states' external loans" (18 Oct 2026)
• Nairametrics, "FG pushes back as World Bank says debt interest swallows 124% of revenue" (18 Oct 2026)
• Proshare, "What to Expect from the Markets this Week – 191026" (17 Oct 2026)
• Nairametrics, "CBN moves to ease Nigeria-China payments as Cardoso takes talks to Beijing" (17 Oct 2026)