Finance Ministry Rejects Claims of 124% Interest-to-Revenue Ratio, Cites Fiscal Reforms
Finance Ministry Rejects Claims of 124% Interest-to-Revenue Ratio, Cites Fiscal Reforms
Finance Ministry Rejects Claims of 124% Interest-to-Revenue Ratio, Cites Fiscal Reforms
The Federal Ministry of Finance has described as misleading claims that the Federal Government’s interest payments reached 124 per cent of revenue in the first half of 2026, arguing that the figures cited from the World Bank’s October 2026 Nigeria Development Update do not provide a complete picture of the country’s fiscal position.
In a statement issued in Abuja on October 18, 2026, the Ministry said the reported ratio was based on mismatched figures, an incomplete revenue base and a half-year assessment that did not reflect the full-year outlook.
According to the Ministry, the interest-payment figure includes debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states. Comparing such obligations with federal revenue alone, it argued, overstates the ratio because debt and revenue figures should cover the same level of government.
The Ministry also said the reported revenue excludes independent revenue earned by government agencies and enterprises but not yet remitted to the Treasury. It added that revenue collections typically increase in the second half of the year due to the statutory timing of certain tax payments.
To support its position, the Ministry cited the 156 per cent interest-to-revenue ratio recorded in the first half of 2025, noting that the full-year debt-service-to-revenue ratio for 2025 fell below 60 per cent, compared with 97 per cent before the current administration’s reforms.
The Ministry further highlighted improvements between the first halves of 2025 and 2026, stating that federal revenue increased by 72 per cent, from ₦3.6 trillion to ₦6.2 trillion, while interest payments rose by 38 per cent, from ₦5.6 trillion to ₦7.7 trillion.
It said the figures reduced the interest-to-revenue ratio by 32 percentage points, from 156 per cent to 124 per cent, while narrowing the gap between interest payments and revenue from ₦2 trillion to ₦1.5 trillion.
The Ministry maintained that the trend reflected progress from ongoing fiscal reforms rather than evidence of fiscal distress.
On debt sustainability, it argued that a six-month snapshot should not be used in isolation to assess the country’s ability to manage its obligations. It cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.
The Ministry also maintained that all Federal Government borrowing is undertaken within limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
It said borrowing activities comply with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that borrowing information is published regularly by the Debt Management Office.
While welcoming scrutiny of public finances, the Ministry urged analysts and commentators to compare like-for-like figures, consider the context behind published data and seek clarification where necessary.
Finance Ministry Rejects Claims of 124% Interest-to-Revenue Ratio, Cites Fiscal Reforms
