World Bank figures show Nigeria spent 7.7 trillion naira on interest payments in the first half of 2026, exceeding federal revenue by 1.5 trillion naira and raising fresh concerns about public spending and the country’s debt burden.
Nigeria’s Federal Government spent more money paying interest on its debts than it generated in revenue during the first six months of 2026, according to figures contained in the World Bank’s October 2026 Nigeria Development Update. The report showed that interest payments reached 7.7 trillion naira between January and June, compared with federal revenue of 6.2 trillion naira. This meant interest obligations alone consumed approximately 124.2 percent of government revenue, exceeding the amount collected by about 1.5 trillion naira. The findings, reported on Monday, October 12, have renewed concerns about the financial pressure facing Africa’s most populous country, particularly as the government attempts to fund infrastructure, education, healthcare and other essential services while meeting its borrowing obligations.
Nigeria’s Federal Ministry of Finance in Abuja, where fiscal policy and government spending priorities are coordinated.
The figures form part of the World Bank’s latest Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, which examines the country’s economic performance and the use of public resources. Although Nigeria recorded an increase in government revenue during the period, the improvement was insufficient to cover its interest obligations. Federal revenue rose from 3.6 trillion naira in the first half of 2025 to 6.2 trillion naira in the corresponding period of 2026, representing an increase of approximately 72.2 percent. The growth was supported by stronger oil receipts, increased corporate tax collections and higher independent revenue. However, the cost of servicing government borrowing also increased, demonstrating how rising interest expenses can weaken the benefits of improved revenue collection.
The World Bank attributed much of the pressure to high domestic borrowing costs, which have increased the amount Nigeria must pay creditors. Its findings showed that interest payments climbed from 5.6 trillion naira in the first half of 2025 to 7.7 trillion naira in the same period of 2026, an increase of 37.5 percent. The federal government, led by President Bola Tinubu, has maintained that economic reforms are necessary to strengthen public finances and support sustainable growth. In his 2026 budget presentation, Tinubu projected total revenue of 34.33 trillion naira and debt servicing expenditure of 15.52 trillion naira for the full year. The latest figures nevertheless expose a significant challenge in translating increased revenue into greater financial capacity for public investment, particularly while interest costs remain elevated.
A closer examination of the World Bank’s figures reveals the scale of Nigeria’s fiscal difficulties. Total federal expenditure increased from 14.6 trillion naira in the first half of 2025 to 16.1 trillion naira in 2026, while personnel costs rose from 3.7 trillion naira to 4.2 trillion naira. Reported federal capital expenditure, however, fell to approximately 700 billion naira, equivalent to just 0.3 percent of gross domestic product. This meant that the government spent about 11 times more on interest obligations than on reported capital projects during the six months. The fiscal deficit narrowed from 11 trillion naira to 9.9 trillion naira, but the World Bank cautioned that the improvement partly reflected unusually low capital spending rather than a substantial reduction in recurring financial commitments.
For ordinary Nigerians, the significance of the figures extends beyond government accounts. Public resources devoted to debt interest are resources that cannot simultaneously be used to improve hospitals, repair roads, expand electricity infrastructure or strengthen public education. The pressure comes at a time when many households are still adjusting to the higher living costs associated with fuel subsidy removal, exchange rate changes and persistent inflation. Traders depend on reliable transport and electricity to keep operating costs manageable, while families require affordable healthcare and education. Previous public demonstrations against rising living costs have illustrated the frustration surrounding economic hardship, although no new interviews or attributable public reactions specifically concerning the October debt figures have been independently established.
Nigeria’s latest debt difficulties recall a significant turning point in its financial history. In 2005, under the administration of President Olusegun Obasanjo, the country negotiated a landmark agreement with the Paris Club of creditor nations to reduce its external debt burden. At the time, Nigeria owed Paris Club creditors approximately 30 billion dollars, much of which had accumulated through longstanding obligations and unpaid interest. The agreement provided about 18 billion dollars in debt cancellation, while Nigeria committed to substantial repayments to settle the remaining obligations. The arrangement was completed in April 2006 and was regarded as an important achievement in restoring fiscal flexibility. Two decades later, Nigeria faces a different debt structure, with substantial domestic borrowing costs now contributing heavily to pressure on the federal budget.
The economic consequences of the current debt burden are particularly important for public infrastructure and national development. When interest payments absorb a large proportion of available income, governments may have less flexibility to finance roads, schools, hospitals, agricultural programmes and other projects that support employment and economic activity. The World Bank’s analysis estimated Nigeria’s public debt stock at approximately 177 trillion naira in 2025, equivalent to about 40 percent of GDP, compared with 67 trillion naira in 2021. Exchange rate valuation changes and the recognition of previously accumulated liabilities contributed to that increase. The report also found that domestic debt represented 57.9 percent of the total debt stock in 2025 but accounted for 72.6 percent of interest payments, highlighting the comparatively high cost of borrowing within Nigeria.
Despite the concerns, Nigeria’s economic outlook is not uniformly negative. In its October 8 assessment, the World Bank reported that real GDP grew by 4.2 percent during the first half of 2026, compared with 3.9 percent in the corresponding period of 2025. Higher global oil prices supported export earnings and public revenue, while the country’s external position improved. The Bank also found that Nigerian states benefited substantially from increased federation revenue, allowing greater investment in transport infrastructure and other projects. However, it identified weaknesses in budget planning, spending efficiency and service delivery. These developments underscore an important distinction between rising government income and the ability to translate that income into improved living conditions, particularly when substantial federal resources remain committed to paying creditors.
The World Bank has recommended stronger revenue mobilisation, more credible budgeting, reduced dependence on expensive borrowing and greater use of financing arrangements offering favourable repayment terms. It also identified the need to extend debt repayment periods where appropriate to reduce refinancing risks. The institution warned that Nigeria’s consolidated fiscal deficit could widen from 3.1 percent of GDP in 2025 to 3.5 percent in 2026 as interest expenses, personnel costs and other government obligations increase. Meanwhile, its broader economic projections suggest that Nigeria could achieve average annual growth of 4.4 percent between 2026 and 2028 if reform efforts continue. The immediate challenge for fiscal authorities will be managing existing obligations while ensuring that increased revenue produces measurable improvements in public services and investment.
Nigeria’s latest financial figures present a central policy challenge for the Tinubu administration: how to reduce the cost of government borrowing without undermining the investment needed to strengthen the economy. Although federal revenue has increased considerably and economic growth has shown signs of improvement, the fact that interest payments exceeded total federal revenue during the first half of 2026 demonstrates that the recovery of public finances remains incomplete. The outcome will depend not only on how much additional money the government collects, but also on whether it can control borrowing costs, improve expenditure management and direct more resources toward productive investment. For millions of Nigerians who depend on functioning public services and economic opportunities, the significance of the debt burden lies ultimately in how much financial space remains to support development and improve everyday living conditions.
