The Federal Government has challenged the World Bank’s assessment of Nigeria’s debt burden, arguing that the reported N7.7tn interest payments in the first half of 2026 do not accurately reflect the country’s fiscal position.
The Federal Ministry of Finance said the claim that interest payments consumed 124 per cent of Federal Government revenue between January and June was misleading, citing differences in the scope of the debt obligations, incomplete revenue figures and the timing of tax collections.
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 followed the World Bank’s October 2026 Nigeria Development Update, which reported that the Federal Government generated N6.2tn in revenue during the first half of the year, against interest payments of N7.7tn.
Calculations based on the figures showed that interest payments were equivalent to approximately 124.2 per cent of revenue, exceeding the amount generated by N1.5tn. However, the World Bank’s published figures did not expressly state the ratio.
The ministry said the calculation was flawed because the interest figure included debt obligations serviced by the Federal Government on behalf of other tiers of government, including external loans obtained by states.
“The interest figure includes debt the Federal Government services on behalf of other tiers of government, including external loans to states. Measuring this against federal revenue alone overstates the ratio, which is only meaningful when debt and revenue cover the same level of government,” it said.
It also argued that the revenue figure excluded income generated by government agencies and enterprises that had yet to be remitted to the Treasury.
According to the ministry, the timing of statutory payments meant that some taxes were collected predominantly in the second half of the year, making the first-half figures insufficient for drawing conclusions about the government's annual debt obligations.
The ministry said the interest-to-revenue ratio had declined from 156 per cent in the first half of 2025 to approximately 124 per cent in the corresponding period of 2026.
It added that the full-year debt-service-to-revenue ratio had dropped below 60 per cent, compared with 97 per cent before the current administration’s reforms.
The government further reported that revenue increased by 72 per cent, from N3.6tn in the first half of 2025 to N6.2tn in the first half of 2026, while interest payments rose by 38 per cent, from N5.6tn to N7.7tn.
Consequently, the ministry said the interest-to-revenue ratio declined by about 32 percentage points, while the difference between interest payments and revenue narrowed from N2tn to N1.5tn.
“This is the result of reforms working, not a sign of fiscal distress,” it stated.
The ministry also argued that a six-month fiscal assessment should not be treated as a conclusive measure of debt sustainability.
It cited the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both principal and interest payments, would amount to 46 per cent of revenue.
“The same World Bank report projects Nigeria’s full-year 2026 debt service, covering both interest and principal, at 46 per cent of revenue. This is the appropriate benchmark, and a guide to avoid the invalid conclusions being drawn,” the statement said.
The Federal Government also defended its borrowing programme, maintaining that loans secured by the administration were lawful and had received the necessary approvals.
It said borrowing remained within the limits authorised by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
The ministry added that the government complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, noting that information on Nigeria’s debt obligations was regularly published by the Debt Management Office.
However, the ministry did not provide revised figures for revenue and interest payments or an alternative interest-to-revenue ratio to support its argument that the published assessment overstated the country's fiscal burden.
FG to begin $1.25bn World Bank loan repayments in 2031
Meanwhile, Nigeria will begin repaying the principal on a $1.25bn World Bank loan in December 2031, with the final instalment on one of the two facilities scheduled for June 2060.
The repayment terms are contained in financing agreements reviewed by The PUNCH for the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme.
The facility is designed to support government reforms aimed at improving access to credit, expanding electricity supply, strengthening trade competitiveness and increasing domestic revenue.
The World Bank approved the $1.25bn financing in June 2026, making it 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.
The Washington-based lender said the programme was intended to support Nigeria's transition towards a more inclusive growth model capable of stimulating economic expansion and creating jobs.
It identified key reform areas as capital market development, digital economy regulation, electronic governance, electricity sector reforms, trade liberalisation, agricultural productivity and domestic revenue mobilisation.
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.
Repayment terms and borrowing costs
According to the agreements, repayments on both facilities will commence on December 15, 2031, although their maturity dates differ.
The $750m IDA credit is scheduled to be fully repaid by June 15, 2051, while the $500m IBRD loan will run until June 15, 2060.
The IDA provides concessional financing to low-income countries on more favourable terms, while the IBRD primarily lends to middle-income and creditworthy lower-income countries under market-linked conditions.
The financing agreements were signed on behalf of Nigeria by the Minister of Finance, Taiwo Oyedele, on October 6, 2026, while the World Bank's Country Director, Mathew Verghis, signed on June 30, 2026.
Under the IDA agreement, Nigeria will repay 2.5 per cent of the original $750m credit every six months, beginning on December 15, 2031, and ending on June 15, 2051.
This translates to $18.75m in principal payments every six months, or $37.5m annually during full repayment years, excluding interest and other applicable charges.
For the IBRD facility, the repayment schedule provides for semi-annual instalments of 1.72 per cent of the original loan amount from December 15, 2031, to December 15, 2059. A final instalment of 1.96 per cent is due on June 15, 2060.
The regular instalments amount to approximately $8.6m every six months, while the final payment is about $9.8m.
Combined, the two facilities will 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 obligations will extend across several administrations, with the final principal payment on the IBRD loan falling due almost 34 years after the agreements were signed.
The repayment schedules cover principal only and do not represent the total cost of borrowing, which will also depend on interest rates and other applicable charges.
Under the IBRD agreement, the interest rate is determined by a reference rate plus a variable spread. The IDA credit carries an interest charge calculated using the reference rate plus a variable spread, less 250 basis points, subject to applicable limits and possible conversions.
The IBRD facility also attracts 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.
For the IDA credit, the agreement provides for a maximum annual commitment charge of 0.5 per cent on the undisbursed financing balance.
The agreements do not specify a fixed dollar amount for total interest payments over the life of the facilities. The eventual cost will therefore depend on the applicable rates and contractual provisions.
Disbursement conditions
The $750m IDA 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.
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.
The release of the second tranche depends on satisfactory progress in implementing the programme, maintaining an adequate macroeconomic framework and completing agreed policy actions.
The IBRD agreement allows the lender to cancel part or all of the undisbursed balance if the government fails to take satisfactory corrective measures within 90 days of receiving notice.
Both agreements have a closing date of December 31, 2027.
Reforms tied to the financing
The agreements identify two broad areas of reform: improving access to financial credit, digital services and electricity, and strengthening competitiveness through trade, taxation and agricultural policy changes.
Measures recognised under the programme include the Investment and Securities Act 2025, the National Integrated Electricity Policy, electricity metering reforms and regulations designed to facilitate private investment in interconnected mini-grids.
Nigeria also committed to 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.
In taxation, the agreements recognise the introduction of 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 per cent to 25 per cent.
The financing arrangements also impose reporting and accountability obligations on the Federal Government.
Nigeria is required to maintain dedicated dollar accounts for receiving the loan proceeds and ensure that equivalent amounts are reflected in its budget management system.
The Federal Ministry of Finance must report the amounts received, relevant account details and transaction records to the World Bank within 30 days of each withdrawal.
The agreements further 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.
Disbursement remains conditional on satisfactory implementation of the agreed reforms and the maintenance of an adequate macroeconomic policy framework.
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