The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt position, rejecting claims that interest payments exceeded federal revenue in the first half of 2026 and threatened debt sustainability.
The Federal Ministry of Finance described the reported interest-to-revenue ratio of 124 per cent as misleading, arguing that the calculation relied on incomplete revenue figures and included debt obligations serviced on behalf of state governments.
The ministry stated its position in a statement issued on Sunday and shared on X by the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The dispute follows the World Bank’s October 2026 Nigeria Development Update, which reportedly put federal revenue at ₦6.2tn and interest payments at ₦7.7tn for the first half of 2026.
An analysis of the published figures by The PUNCH showed that interest payments represented approximately 124.2 per cent of revenue, exceeding revenue by ₦1.5tn. The ratio was calculated from the reported figures rather than expressly stated in the World Bank report.
FG Explains Why It Disputes World Bank’s Figures
The Ministry of Finance said the calculation compared debt obligations covering multiple tiers of government with revenue attributed solely to the Federal Government.
According to the ministry, the interest-payment figure includes external loans serviced by the Federal Government on behalf of state governments. It argued that the ratio becomes meaningful only when the debt obligations and revenue figures cover the same level of government.
The ministry also said the revenue figure excluded income earned by government agencies and enterprises that had not yet been remitted to the Treasury.
It added that statutory payment schedules meant some taxes were collected predominantly in the second half of the year, making first-half revenue an incomplete basis for evaluating annual debt obligations.
The ministry said the interest-to-revenue ratio fell from 156 per cent in the first half of 2025 to approximately 124 per cent in the corresponding period of 2026.
It further stated that the full-year debt-service-to-revenue ratio had declined to below 60 per cent, compared with 97 per cent before the current administration’s reforms.
According to the ministry, federal revenue rose by 72 per cent, from ₦3.6tn in the first half of 2025 to ₦6.2tn in the corresponding period of 2026. Interest payments increased by 38 per cent, from ₦5.6tn to ₦7.7tn.
The ministry said the faster growth in revenue helped reduce the interest-to-revenue ratio by about 32 percentage points and narrowed the gap between interest payments and revenue from ₦2tn to ₦1.5tn.
It described the figures as evidence that the government’s fiscal reforms were producing results rather than indicating fiscal distress.
Ministry Defends Borrowing Programme
The ministry also rejected the use of a six-month fiscal snapshot as a definitive measure of debt sustainability.
It argued that the World Bank’s full-year projections provided a more appropriate benchmark, citing a projected 46 per cent debt-service-to-revenue ratio for 2026, covering both interest and principal repayments.
The government further maintained that borrowing under the current administration had complied with applicable laws and received the necessary approvals.
According to the statement, the loans fell within borrowing limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
The ministry said the borrowing programme complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003. It added that details of Nigeria’s debt obligations were regularly published by the Debt Management Office.
However, the ministry did not provide revised revenue and interest-payment figures or an alternative calculation to substantiate its objections to the reported 124 per cent ratio.
Nigeria To Begin Repaying $1.25bn World Bank Loan In 2031
Separately, Nigeria will begin repaying the principal on a $1.25bn World Bank loan on December 15, 2031, according to financing agreements reviewed by The PUNCH.
The facility, secured under the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme, is intended to support reforms aimed at improving access to credit, strengthening electricity supply, enhancing trade competitiveness and increasing government revenue.
The financing comprises a $750m concessional credit from the International Development Association (IDA) and a $500m loan from the International Bank for Reconstruction and Development (IBRD), both members of the World Bank Group.
The facility was approved in 2026 amid public concerns about Nigeria’s rising debt burden and calls for the government to reduce external borrowing.
The World Bank said the programme would support Nigeria’s transition towards more inclusive economic growth by strengthening the foundations for competitiveness, investment and job creation.
The loan is the second-largest single World Bank facility secured by Nigeria under President Bola Tinubu, after the $1.5bn Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024.
IDA Credit To Be Repaid By 2051
Under the IDA agreement, Nigeria will repay the $750m credit in semi-annual principal instalments equivalent to 2.5 per cent of the original amount.
Payments are scheduled to begin on December 15, 2031, and end on June 15, 2051.
Each regular instalment amounts to $18.75m, equivalent to $37.5m annually during full repayment years, excluding interest and other applicable charges.
The IDA provides concessional financing to eligible low-income countries on terms generally more favourable than commercial borrowing.
The agreement also provides for a maximum annual commitment charge of 0.5 per cent on the undisbursed financing balance.
The credit is structured for disbursement in a single tranche, subject to the World Bank’s assessment of Nigeria’s economic policies and implementation of the agreed reforms.
$500m Loan Runs Until June 2060
The $500m IBRD loan has a longer repayment period, with principal instalments beginning on December 15, 2031, and the final payment scheduled for June 15, 2060.
The agreement provides for semi-annual principal repayments of 1.72 per cent from December 2031 through December 2059, followed by a final instalment of 1.96 per cent on June 15, 2060.
The regular instalments amount to approximately $8.6m every six months, while the final principal payment is about $9.8m.
Combined, the two facilities require principal repayments of approximately $27.35m every six months between December 2031 and June 2051, equivalent to $54.7m annually during full repayment years.
The repayment schedules will extend across several administrations, with the final payment on the IBRD loan falling due nearly 34 years after the agreements were signed.
The schedules cover principal only and do not represent the total cost of borrowing.
Under the IBRD agreement, the interest rate is determined by a reference rate plus a variable spread. The agreement also provides for a front-end fee of 0.25 per cent, equivalent to $1.25m, and an annual commitment charge of 0.25 per cent on the undisbursed balance.
The IDA credit’s interest charge is calculated using the reference rate plus a variable spread, less 250 basis points, subject to applicable contractual provisions.
The agreements do not specify a fixed dollar amount for total interest payments over the repayment period. The final borrowing cost will depend on applicable interest rates, disbursements and other contractual charges.
Disbursement Tied To Economic Reforms
The $500m IBRD facility is divided into two withdrawal tranches of $249.375m each, with the remaining $1.25m allocated to the front-end fee.
Release of the second tranche depends on satisfactory progress in implementing the programme, maintaining an adequate macroeconomic framework and completing agreed policy actions.
Under the agreement, the World Bank may cancel part or all of the undisbursed balance if the government fails to take satisfactory corrective measures within 90 days of receiving notice.
Both financing agreements have a closing date of December 31, 2027.
The reform programme covers access to financial credit, digital services and electricity, alongside measures to strengthen trade, taxation and agricultural competitiveness.
The agreements recognise reforms involving the Investment and Securities Act 2025, the National Integrated Electricity Policy, electricity metering and regulations supporting private investment in interconnected mini-grids.
They also cover trade reforms under the African Continental Free Trade Area, including the gradual liberalisation of 90 per cent of tariffs on goods from African countries over 10 years.
Other measures include removing import bans on specified essential food products and inputs, reducing import adjustment taxes on selected commodities by at least 25 per cent in 2026, and progressively eliminating applicable adjustment taxes between 2027 and 2036.
Tax reforms recognised under the agreements include mandatory electronic invoicing for Value Added Tax, a 15 per cent minimum effective tax rate for large companies and multinational enterprises, and an increase in the maximum personal income tax rate from 24 to 25 per cent.
World Bank Requires Financial Reporting And Audits
The financing agreements impose reporting and accountability requirements on the Nigerian government.
Nigeria must maintain dedicated dollar accounts for receiving loan proceeds and ensure that equivalent amounts are reflected in its budget management system.
The Federal Ministry of Finance is required to report the amounts received, relevant account details and transaction records to the World Bank within 30 days of each withdrawal.
The agreements also require the accounts to be audited by auditors of the Central Bank of Nigeria acceptable to the World Bank.
Certified audit reports must be submitted within four months of withdrawal and made publicly available.
The financing is intended to support Nigeria’s economic reform programme, with disbursement conditional on satisfactory implementation of agreed measures and the maintenance of an adequate macroeconomic policy framework.
The dispute over the country’s debt position comes as Nigeria continues to defend its fiscal reforms and manage external borrowing commitments that will extend well beyond the current administration.
