Key points

• Interest payments of N7.7 trillion exceeded revenue of N6.2 trillion by N1.5 trillion in H1 2026.
• Federal revenue rose 72.2%, but capital spending fell to N700 billion, 11 times less than interest.
• The World Bank urges less costly borrowing, concessional financing and longer debt maturities.

The Federal Government spent N7.7 trillion on interest payments in the first half of 2026, equal to 124.2% of its total revenue of N6.2 trillion, according to the World Bank’s October Nigeria Development Update.

That left interest costs N1.5 trillion above everything the government collected between January and June.

The bill rose by N2.1 trillion, or 37.5%, from N5.6 trillion a year earlier, largely because of high domestic borrowing costs. The Bank said interest now equals 3.1% of GDP, up from 2.5%.

There was some good news. Revenue climbed 72.2% from N3.6 trillion to N6.2 trillion, helped by stronger oil receipts, higher corporate tax collections and increased independent revenues.

As a result, the interest-to-revenue ratio improved from about 155.6% in the first half of 2025.

However, spending grew too. Total federal expenditure rose 10.3% to N16.1 trillion, and personnel costs increased from N3.7 trillion to N4.2 trillion after wage adjustments.

Interest and personnel together took N11.9 trillion, roughly 73.9% of all spending and nearly twice revenue.

Capital spending went the other way. It dropped from 1% of GDP to 0.3%, about N700 billion, which means the government paid 11 times more in interest than it spent on reported capital projects.

The fiscal deficit narrowed from N11 trillion to N9.9 trillion, or 4% of GDP. Even so, the World Bank cautioned that the improvement owes partly to weak capital execution, not lower recurrent obligations.

“The improved early-year fiscal outturn should be interpreted cautiously,” it said, adding that a pickup in capital spending and pre-election outlays later in the year will add pressure.

On the wider picture, the Bank estimated debt stock at about N177 trillion in 2025, or 40% of GDP, up from N67 trillion, or 27.6%, in 2021.

Exchange-rate effects and the recognition of securitized Ways and Means advances drove much of the rise. Domestic debt made up 57.9% of the stock but generated 72.6% of interest payments.

Consequently, the Bank recommended limiting expensive borrowing, prioritizing concessional financing and extending maturities to ease refinancing risk. It projects the consolidated deficit widening to 3.5% of GDP in 2026 and urged stronger revenue mobilization and budget credibility.