By Joyce Ekeh with agency report
Nigeria’s debt interest payments jumped by 37.5 per cent to N7.7 trillion in the first half of 2026, exceeding the Federal Government’s revenue of N6.2 trillion by N1.5 trillion, according to the World Bank.
The figures mean that interest payments alone were 24.2 per cent higher than the government’s total revenue during the six-month period, highlighting the growing pressure of debt servicing on public finances.
The World Bank disclosed this in its 2026 Nigeria Development Update (NDU), titled: “Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities.”
Interest payments rose from N5.6 trillion in the first half of 2025 to N7.7 trillion in the corresponding period of 2026, increasing from 2.5 per cent to 3.1 per cent of Gross Domestic Product (GDP).
The surge came despite a significant improvement in government revenue, which rose by more than 72 per cent from N3.6 trillion in the first half of 2025 to N6.2 trillion in the first half of 2026.
Revenue rises, but debt costs climb faster
According to the World Bank, the increase in revenue was driven by a recovery in oil receipts, stronger corporate tax collections and higher independent revenues.
However, customs revenue remained stable, while Value Added Tax (VAT) collections were comparatively flat.
The bank stated: “Federal revenues rose to about 2.5 per cent of GDP (N6.2 trillion), from 1.6 per cent of GDP (N3.6 trillion) a year earlier, supported by a recovery in oil receipts, stronger corporate tax collections, and higher independent revenues, while customs revenues held stable and VAT collections stayed comparatively flat.”
Despite the revenue gains, the rising cost of servicing public debt continued to absorb a substantial share of government resources, with interest payments reaching 3.1 per cent of GDP.
The trend underscores the challenge facing the Federal Government as it seeks to improve revenue generation while meeting rising debt obligations and funding other expenditure priorities.
Capital expenditure drops to N700bn
The rising interest bill coincided with a sharp decline in reported capital expenditure, which fell to N700 billion, or 0.3 per cent of GDP, in the first half of 2026.
This compared with 1.0 per cent of GDP in the corresponding period of 2025.
The decline points to a smaller reported share of economic output allocated to capital spending during the period, even as debt interest costs increased.
Other expenditure remained unchanged at 1.3 per cent of GDP, according to the World Bank report.
Meanwhile, total government expenditure rose to N16.1 trillion in the first half of 2026 from N14.6 trillion a year earlier.
However, total spending declined marginally as a share of GDP, from 6.6 per cent to 6.5 per cent.
Personnel costs rise to N4.2trn
The report also showed that personnel costs increased to N4.2 trillion in the first half of 2026 from N3.7 trillion in the same period of 2025, following wage adjustments.
Despite the increase in nominal terms, personnel costs remained unchanged at 1.7 per cent of GDP.
The latest figures highlight the competing demands on the Federal Government’s finances, as higher revenue collections contend with rising debt interest payments, personnel costs and other spending commitments.
With interest payments exceeding total revenue during the period, the figures also draw attention to the fiscal pressure associated with domestic borrowing costs and the resources available for capital projects and other public services.
The World Bank’s findings place debt servicing and revenue mobilisation at the centre of Nigeria’s fiscal challenges in the first half of 2026, with the sharp decline in reported capital expenditure adding to concerns over the composition of government spending.
