Nigeria’s debt servicing burden has intensified, with the Federal Government spending ₦7.7 trillion on interest payments in the first half of 2026, exceeding its total revenue for the period, according to the World Bank.
The figure represents a significant increase from the ₦5.6 trillion recorded during the same period in 2025, as high domestic borrowing costs continue to put pressure on public finances.
The interest bill accounted for 124.19 per cent of federal government revenue between January and June 2026, highlighting the challenge of balancing debt obligations with spending on infrastructure and other public services.
The figures were contained in the World Bank’s 2026 Nigeria Development Update (NDU), titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities.
Debt Interest Rises Despite Higher Government Revenue
According to the report, interest payments climbed to 3.1 per cent of Nigeria’s gross domestic product (GDP) in the first half of 2026, compared with 2.5 per cent in the corresponding period of the previous year.
The increase came even as federal revenue improved from ₦3.6 trillion, equivalent to 1.6 per cent of GDP, in the first half of 2025 to ₦6.2 trillion, or 2.5 per cent of GDP, in the first six months of 2026.
The World Bank attributed the stronger revenue performance to improved oil receipts, increased corporate tax collections and higher independent revenues.
Customs revenue remained broadly stable, while value-added tax (VAT) collections recorded comparatively little change.
Despite the improvement in government earnings, the report showed that interest payments continued to absorb a larger share of available resources.
“Interest payments increased to 3.1 percent of GDP (N 7.7 trillion) from 2.5 percent (N5.6 trillion) amid high domestic borrowing costs,” the bank said.
Capital Spending Falls Sharply
The World Bank also highlighted a significant reduction in reported capital expenditure during the period.
Capital spending dropped to ₦700 billion, representing 0.3 per cent of GDP, from ₦1 trillion, or 1.0 per cent of GDP, in the first half of 2025.
Meanwhile, other government expenditure remained unchanged at 1.3 per cent of GDP.
The figures suggest that although federal revenue increased, the rising cost of servicing debt coincided with a sharp decline in reported spending on capital projects.
Federal Expenditure Reaches ₦16.1trn
The report showed that total federal expenditure rose to ₦16.1 trillion in the first half of 2026, equivalent to 6.5 per cent of GDP.
This compared with ₦14.6 trillion, or 6.6 per cent of GDP, recorded in the same period of 2025.
Although spending increased in nominal terms, its share of the economy declined slightly.
The composition of expenditure also changed, particularly in personnel costs, which increased following wage adjustments.
Personnel Costs Climb to ₦4.2trn
Spending on personnel rose to ₦4.2 trillion in the first six months of 2026, compared with ₦3.7 trillion a year earlier.
The World Bank linked the increase to wage adjustments, although personnel expenditure remained stable at 1.7 per cent of GDP.
Overall, the report presents a mixed picture of Nigeria’s public finances: federal revenue improved considerably, but interest payments rose even faster, capital expenditure fell and personnel costs increased.
With debt interest consuming more than the government’s revenue for the period, the figures underscore the pressure borrowing costs continue to place on the Federal Government’s spending capacity.
Source: World Bank
