Nigeria's Debt Interest Payments Soar 37.5% to N7.7 Trillion in H1 2026, Exceeding Revenue

Nigeria is experiencing a significant fiscal challenge as its debt interest payments have surged by 37.5% to N7.7 trillion in the first half of 2026, up from N5.6 trillion in the same period last year. This increase has resulted in interest payments exceeding the Federal Government's revenue of N6.2 trillion by N1.5 trillion, which represents 24.2% of revenue. The alarming figures were disclosed in the World Bank's latest Nigeria Development Update (NDU), titled ‘Beyond the Federal Purse: How Higher Revenues Reshaped State Priorities’.

The report indicates that interest payments have now reached 3.1% of Nigeria's Gross Domestic Product (GDP), up from 2.5% in the first half of 2025. This rise highlights the growing strain that debt servicing is placing on the country's public finances, even as federal revenue has shown substantial growth, increasing by over 72% during the same period.

According to the World Bank, the rise in federal revenue to N6.2 trillion, equivalent to 2.5% of GDP, was bolstered by a recovery in oil receipts, robust corporate tax collections, and enhanced independent revenues. However, customs revenues remained stable, and collections from Value Added Tax (VAT) showed minimal change. The World Bank's report noted, “Federal revenues rose to about 2.5% of GDP (N6.2 trillion), from 1.6% of GDP (N3.6 trillion) a year earlier, supported by a recovery in oil receipts and stronger corporate tax collections.”

Despite these positive revenue trends, the growing debt burden poses a serious threat to Nigeria’s economic stability. Policymakers are now faced with the urgent need to address the implications of such a high debt servicing cost on future investments and essential public services. Without decisive action, the gap between revenue generation and expenditure is likely to widen further, exacerbating the nation’s fiscal challenges.