By Our Correspondent
Nigeria’s federal government spent N7.7 trillion on debt interest payments in the first half of 2026, exceeding its total revenue by N1.5 trillion, as mounting borrowing costs coincided with a sharp decline in reported capital expenditure, according to the World Bank.
The figures, contained in the bank’s October 2026 Nigeria Development Update (NDU), titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, show that interest payments rose by 37.5 percent from N5.6 trillion in the corresponding period of 2025. The amount represented 124.2 percent of the N6.2 trillion in revenue collected by the federal government between January and June.
The World Bank attributed the increase in interest payments, which climbed to 3.1 percent of gross domestic product (GDP) from 2.5 percent a year earlier, to high domestic borrowing costs. The increase came despite a 72.2 percent rise in federal revenue, from N3.6 trillion in the first half of 2025, supported by recovering oil receipts, stronger corporate tax collections, and higher independent revenues. Customs receipts remained stable, while value-added tax collections were comparatively flat.
The report also highlighted a steep decline in reported capital expenditure, which fell to N700 billion, equivalent to 0.3 percent of GDP, from 1.0 percent of GDP in the corresponding period of 2025. Meanwhile, personnel costs rose to N4.2 trillion from N3.7 trillion following wage adjustments, while other expenditure remained unchanged at 1.3 percent of GDP.
Total federal expenditure increased to N16.1 trillion from N14.6 trillion year over year, although it edged down as a share of GDP, to 6.5 percent from 6.6 percent. The figures highlight the growing strain of debt-interest payments on public finances and the limited fiscal room available for development spending, even as revenue improves. The challenge is to translate higher receipts into productive investment and better public services while containing borrowing costs.
Items and Verification
Interest payments: N5.6tn to N7.7tn
Correct. Increase of N2.1tn, or 37.5 percent.
Revenue: N3.6tn to N6.2tn
Correct. Increase of approximately 72.2 percent.
Interest as a share of revenue
124.2 percent, meaning interest exceeded revenue by about 24.2 percent of revenue, or N1.5tn.
Interest and revenue as shares of GDP
3.1 percent and 2.5 percent, respectively, as reported by the World Bank.
Capital expenditure
Reported at N700bn, or 0.3 percent of GDP, against 1.0 percent a year earlier.
Personnel costs
Rose from N3.7tn to N4.2tn; the reported share remained 1.7 percent of GDP.
Total expenditure
Increased from N14.6tn to N16.1tn, while its GDP share declined from 6.6 percent to 6.5 percent.
The figures above were cross-checked and verified and are consistent with the World Bank’s October 2026 update and contemporaneous reporting, supporting the conclusion that rising interest costs are putting pressure on the federal government’s finances. However, the fall in reported capital expenditure alone does not establish that debt interest directly caused the decline.
With additional reports from the World Bank’s Nigeria Development Update, October 2026, and the Vanguard
IA Development Update, October 2026, and Vanguard.