Nigeria’s Federal Government spent ₦7.7 trillion on debt interest payments in the first half of 2026, exceeding its total revenue of ₦6.2 trillion by ₦1.5 trillion, according to the World Bank.
The figure represents 124.19 per cent of federal revenue between January and June, highlighting the pressure rising debt costs continue to place on public finances despite improved revenue collection.
In its 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities, the World Bank attributed the increase in interest payments largely to high domestic borrowing costs.
Interest payments rose from ₦5.6 trillion in the first half of 2025 to ₦7.7 trillion in the corresponding period of 2026, an increase of ₦2.1 trillion, or 37.5 per cent.
The bank said interest costs climbed from 2.5 per cent of gross domestic product (GDP) in the first half of 2025 to 3.1 per cent in the same period of 2026.
Revenue Rises Despite Higher Debt Costs
The increase in interest payments came as federal government revenue improved significantly during the period.
According to the World Bank, revenue rose from ₦3.6 trillion in the first half of 2025 to ₦6.2 trillion in the first half of 2026, representing an increase of about 72.2 per cent.
The bank attributed the growth to improved oil receipts, stronger corporate tax collections and higher independent revenues. Customs revenue remained broadly stable, while value-added tax collections recorded comparatively little change.
Despite the improvement, the government’s revenue remained insufficient to cover its interest obligations, leaving a gap of ₦1.5 trillion between what it collected and what it paid in interest.
Capital Spending Falls To ₦700bn
The World Bank’s report also highlighted a sharp decline in reported federal capital expenditure during the period.
Capital spending fell from about ₦1 trillion, equivalent to 1 per cent of GDP, in the first half of 2025 to ₦700 billion, or 0.3 per cent of GDP, in the first half of 2026.
The figures mean the Federal Government spent roughly 11 times more on interest payments than on reported capital projects during the six-month period.
Read also: FG Can No Longer Cover Electricity Tariff Shortfalls, Says Tegbe
Meanwhile, total federal expenditure rose in nominal terms from ₦14.6 trillion in the first half of 2025 to ₦16.1 trillion in the corresponding period of 2026, although spending declined slightly as a share of GDP, from 6.6 per cent to 6.5 per cent.
Personnel Costs Also Increase
Personnel expenditure increased from ₦3.7 trillion to ₦4.2 trillion following wage adjustments, the report showed.
However, personnel costs remained at 1.7 per cent of GDP in both periods.
The figures underscore the competing demands on government finances as higher interest obligations and personnel costs absorb resources that could otherwise support infrastructure and other public spending priorities.
Although federal revenue improved in the first half of 2026, the World Bank’s figures show that the rise was not enough to offset the growing cost of servicing government debt.
The report highlights the challenge facing the government as it seeks to strengthen revenue generation while managing borrowing costs and funding capital projects.
