Nigeria’s debt interest payments surge 37.5% to N7.7trn in H1’26 — World Bank
By Yinka Kolawole with Agency Report
Nigeria’s interest payments on debt increased by 37.5 percent to 7.7 trillion naira in the first half of 2026, up from 5.6 trillion naira during the same period in 2025. This surge puts interest payments above the Federal Government’s revenue of 6.2 trillion naira for the first six months of 2026, creating a shortfall of 1.5 trillion naira, or 24.2 percent.
These findings are detailed in the World Bank’s 2026 Nigeria Development Update (NDU), titled “Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities.”
The report highlights that interest payments constituted 3.1 percent of Nigeria’s Gross Domestic Product (GDP) in the first half of 2026, up from 2.5 percent in the previous year, reflecting increasing pressures on public finances due to debt servicing.
Despite a substantial increase in federal revenue, which rose over 72 percent to 6.2 trillion naira—equivalent to 2.5 percent of GDP—from 3.6 trillion naira, or 1.6 percent of GDP, in the first half of 2025, the debt burden continues to climb. The World Bank attributed this revenue growth to recovering oil receipts, enhanced corporate tax collections, and increased independent revenues, while customs revenues remained stable and Value Added Tax (VAT) collections showed little variation.
The report states, “Federal revenues rose to about 2.5 percent of GDP (6.2 trillion naira), up from 1.6 percent of GDP (3.6 trillion naira) 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.”
Expenditures on interest payments also increased significantly, rising to 3.1 percent of GDP, or 7.7 trillion naira, from 2.5 percent, or 5.6 trillion naira, as domestic borrowing costs remain high.
Adding to the fiscal challenges, reported capital expenditure saw a sharp decline, dropping to 0.3 percent of GDP, or 700 billion naira, from 1.0 percent in the same period of 2025. Other expenditures remained stable at 1.3 percent of GDP.
Overall, total government expenditure rose to 16.1 trillion naira in the first half of 2026, up from 14.6 trillion naira a year earlier, although it experienced a slight decrease as a share of GDP, falling to 6.5 percent from 6.6 percent. Personnel costs similarly increased to 4.2 trillion naira from 3.7 trillion naira after wage adjustments, but this was unchanged at 1.7 percent of GDP.
The data underscores the ongoing financial strain posed by escalating debt-servicing costs on the Federal Government’s fiscal health, as interest payments now surpass revenue and capital spending contracts as a share of the economy.
