Nigeria spent ₦7.7 trillion on interest payments during the first half of 2026, surpassing total federal government revenue by ₦1.5 trillion, according to new figures published by the World Bank.
In its latest report, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, the multilateral lender revealed that debt servicing costs rose significantly from ₦5.6 trillion recorded during the same period in 2025.
The surge in interest payments was largely driven by high domestic borrowing costs, with debt servicing consuming 124.19 per cent of the government’s total revenue between January and June 2026. This pushed debt service obligations from 2.5 per cent to 3.1 per cent of Nigeria’s Gross Domestic Product (GDP).
Federal revenue grows despite heavy debt burden
Despite the heavy debt service outlay, federal government revenue experienced growth during the six-month period. Total receipts reached ₦6.2 trillion (2.5 per cent of GDP), up from ₦3.6 trillion (1.6 per cent of GDP) in the first half of 2025.
The World Bank attributed the improved revenue generation to several economic factors:
Oil earnings recovery: Stronger performance in oil receipts contributed to top-line gains.
Corporate taxes: Higher collections from corporate tax revenues boosted federal coffers.
Independent receipts: Independent revenues generated by government agencies saw significant increases.
VAT and Customs: Value-Added Tax (VAT) collections remained relatively unchanged, while customs revenues maintained stable baseline levels.
Capital expenditure declines as total spending rises
The escalation in debt obligations impacted capital project execution across the country. Reported capital expenditure dropped to ₦700 billion (0.3 per cent of GDP) in H1 2026, down sharply from ₦2.2 trillion (1.0 per cent of GDP) recorded in the corresponding period of 2025.
Overall federal expenditure increased to ₦16.1 trillion (6.5 per cent of GDP), compared to ₦14.6 trillion (6.6 per cent of GDP) spent during H1 2025.
Meanwhile, government personnel expenses rose from ₦3.7 trillion to ₦4.2 trillion following national wage adjustments, though wage costs remained stable at 1.7 percent of overall GDP.
