Nigeria Faults World Bank’s Debt Servicing Analysis

The Nigerian Government has faulted the World Bank’s assessment that federal debt servicing exceeded revenue by 124 per cent in the first half of 2026, arguing that the analysis did not accurately reflect the Federal Government’s finances.

The World Bank, in its recent Nigeria Development Update, reported that federal debt servicing stood at 124 per cent of revenue during the period.

However, the Federal Ministry of Finance, in a statement on Sunday, said the analysis included debt payments made by the Nigerian Government on behalf of other tiers of government, including external loans to states.

It argued that comparing these payments with federal revenue alone overstated the ratio because debt obligations and revenue must cover the same level of government for a meaningful assessment.

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

“The interest figure includes debt the Nigerian Government services on behalf of other tiers of government, including external loans to states.

“Measuring this against federal revenue alone overstates the ratio which is only meaningful when debt and revenue cover the same level of government.”

The ministry also argued that the revenue figure used in the assessment was incomplete because it excluded independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury.

It added that government revenue typically rises in the second half of the year because of the statutory timing of certain tax payments.

According to the ministry, the debt servicing-to-revenue ratio stood at 156 per cent in the first half of 2025, while the full-year ratio fell below 60 per cent, compared with 97 per cent before the current administration’s reforms.

The ministry described the figures as evidence of progress under the government’s economic reforms.

It said federal revenue increased by 72 per cent between the first halves of 2025 and 2026, rising from ₦3.6 trillion to ₦6.2 trillion.

Over the same period, interest payments rose by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion.

“Revenue is therefore growing almost twice as fast as interest costs. As a result, the interest-to-revenue ratio fell by 32 percentage points in a single year, from 156% to 124%, and the gap between interest and revenue 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.

The ministry further maintained that debt sustainability should be assessed over a full financial year rather than six months.

It cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.

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

The statement added that all Nigerian Government borrowing fell within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

It also maintained that borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that borrowing information was regularly published by the Debt Management Office.

The ministry welcomed scrutiny of public finances but urged analysts and commentators to compare figures covering the same levels of government, interpret the data in context and seek clarification where necessary.

“The Ministry welcomes informed scrutiny of public finances. 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 statement added.