Nigeria’s Federal Ministry of Finance insists that interest payments of N7.7 trillion in the first half of 2026 do not indicate fiscal distress, even as reported capital spending dropped to about N700 billion, according to the World Bank.
Revenue rose 72% to N6.2 trillion from N3.6 trillion a year earlier, while interest payments increased 38% from N5.6 trillion. “This is the result of reforms working, not a sign of fiscal distress,” the Ministry said on Sunday in a statement posted on X.
Those reforms centre on the removal of the fuel subsidy and the unification of the exchange rate.
Interest still exceeded revenue by N1.5 trillion. The interest-to-revenue ratio improved from 156% in the first half of 2025 to 124%. The Ministry added that the full-year 2025 debt-service-to-revenue ratio ended below 60%, down from 97% before the reforms.
Reported federal capital expenditure, however, fell to 0.3% of GDP from about 1% in the same period of 2025. At N700 billion, capital outlays were roughly one-eleventh of the interest bill, the World Bank’s October Nigeria Development Update showed.
Interest and personnel costs together reached N11.9 trillion, nearly 74% of total federal spending of N16.1 trillion. The World Bank said the narrower half-year deficit partly reflected lower capital execution and warned that higher project spending plus pre-election outlays later in 2026 would add pressure.
The Ministry called the 124% figure misleading. It said the interest total includes debt the federal government services for state governments, while revenue excludes unremitted independent income from agencies. Half-year data also understate full-year collections because of tax payment timing.
“Debt sustainability is assessed on a full-year basis, not over six months,” the statement said. The same World Bank report projects full-year 2026 debt service, covering interest and principal, at 46% of revenue.
State governments, by contrast, used higher revenue allocations to raise the share of capital spending in their budgets from roughly 46% to 61%, with notable increases in roads , agriculture, housing and energy, the report found.
The Ministry said all borrowing remains within limits approved by the National Assembly under the 2026 Appropriation Act and complies with Nigeria’s Fiscal Responsibility Act and Debt Management Office Act. It welcomed scrutiny but urged analysts to compare equivalent figures and seek clarification where data are unclear.
Whether stronger revenue ultimately restores capital spending, rather than remaining dominated by interest and personnel costs, will become clearer in the second half of the year.
