Misleading” — FG Rejects 124% Interest-To-Revenue Narrative

The Federal Ministry of Finance has faulted reports suggesting that the Federal Government’s interest payments reached 124 per cent of revenue in the first half of 2026, describing the conclusion as misleading.

The ministry, in a statement issued in Abuja on Sunday, argued that the calculation presented an incomplete picture of the government’s finances because it compared interest payments covering different tiers of government with federal revenue alone.

“This conclusion is misleading, for three reasons,” the ministry said in its response to recent analysis and public commentary citing the World Bank’s October 2026 Nigeria Development Update.

According to the ministry, the interest figure includes debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states, while the revenue figure excludes independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury.

It also argued that government revenue typically increases in the second half of the year because of the statutory timing of certain tax payments, making a half-year comparison potentially unrepresentative of the full-year fiscal position.

The ministry cited the first-half 2025 figures, when the interest-to-revenue ratio stood at 156 per cent, compared with a full-year debt-service-to-revenue ratio below 60 per cent in 2025.

It said the figures demonstrated the importance of considering the period covered and the components included in the calculation before drawing conclusions about the country’s debt position.

Providing figures to support its argument, the ministry said federal revenue increased by 72 per cent, from N3.6 trillion in the first half of 2025 to N6.2 trillion in the corresponding period of 2026.

Interest payments, however, rose by 38 per cent, from N5.6 trillion to N7.7 trillion over the same period.

Consequently, it said the interest-to-revenue ratio declined from 156 per cent to 124 per cent, while the gap between interest payments and revenue narrowed from N2 trillion to N1.5 trillion.

The ministry described the development as evidence of progress under the current administration’s economic reforms.

It further argued that debt sustainability should be assessed using full-year figures rather than a six-month snapshot.

“The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue,” it said, describing the projection as the appropriate benchmark.

The ministry also maintained that all Federal Government borrowing falls within limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.

It said borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that borrowing information was regularly published by the Debt Management Office.

The ministry said it welcomed scrutiny of public finances but urged analysts to compare like with like and interpret fiscal figures within their proper context.