Nigeria’s rising debt-servicing costs have come under fresh scrutiny following a World Bank report showing that the Federal Government spent ₦7.7 trillion on interest payments in the first half of 2026, exceeding its total revenue of ₦6.2 trillion during the same period.
According to a report published by The PUNCH on Monday, October 12, the figures were contained in the World Bank’s October 2026 Nigeria Development Update, which examined government revenue, expenditure and the country’s broader fiscal position.
The report indicates that the Federal Government’s interest payments were approximately 124.2 per cent of its revenue between January and June 2026. In practical terms, the government spent about ₦1.24 on debt interest for every ₦1 it generated in revenue, leaving less money available for other public responsibilities.
Although government revenue increased compared with the previous year, the growth in interest payments continues to put pressure on public finances.
The World Bank reported that federal revenue rose from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion during the corresponding period in 2026. This represents an increase of approximately 72.2 per cent, supported by improved oil receipts, stronger corporate tax collections and higher revenue from independent sources.
However, interest payments also increased, rising from ₦5.6 trillion in the first half of 2025 to ₦7.7 trillion in the first half of 2026. The increase reflects the cost of servicing government borrowing, particularly amid high domestic interest rates.
Pressure on Infrastructure and Public Services
The growing cost of debt servicing has raised concerns about the amount of money available for infrastructure, education, healthcare and other public services.
According to the report, total Federal Government expenditure increased from ₦14.6 trillion in the first half of 2025 to ₦16.1 trillion in the same period this year.
Personnel costs also rose from ₦3.7 trillion to ₦4.2 trillion, following wage adjustments and other salary-related obligations. Meanwhile, reported capital expenditure fell to approximately ₦700 billion, equivalent to 0.3 per cent of gross domestic product.
The World Bank cautioned that the improvement in the government’s fiscal balance should be interpreted carefully because it was partly associated with low reported capital spending.
This suggests that although the government’s financial position showed some improvement, reduced investment in capital projects could limit the pace of infrastructure development and the delivery of essential public services.
World Bank Recommends More Careful Borrowing
The report placed Nigeria’s public debt stock at approximately ₦177 trillion in 2025, equivalent to about 40 per cent of GDP, compared with ₦67 trillion in 2021.
The World Bank recommended measures to reduce the risks associated with expensive borrowing, including greater use of concessional financing and extending debt repayment periods to reduce refinancing pressure.
For households and businesses, the country’s debt position remains an important economic issue because government spending decisions can influence infrastructure development, public investment and the resources available for essential services.
While higher revenue collection is a positive development, the challenge for the government will be to ensure that the additional income translates into improved living conditions, stronger infrastructure and better economic opportunities for Nigerians.
The figures highlight the need to balance debt obligations with productive spending that supports long-term economic growth.
