The Federal Government spent ₦7.7 trillion on interest payments in the first half of 2026. Its revenue was ₦6.2 trillion. Interest exceeded revenue by ₦1.5 trillion. The World Bank disclosed the figures in its October Nigeria Development Update. Interest payments rose 37.5% from ₦5.6 trillion in the same period of 2025. The increase was driven by high domestic borrowing costs.
Nigeria has spent more on debt service than on capital expenditure for years. In 2023, the government spent ₦6.9 trillion on debt service against ₦5.5 trillion on capital projects. In 2024, the ratio worsened. The government borrows domestically at high rates. It also borrows externally. The debt stock is over ₦130 trillion. Interest consumes revenue that should fund infrastructure, health and education. The pattern is unsustainable. The World Bank has warned repeatedly.
Federal revenue increased 72.2% year-on-year. It was supported by stronger oil receipts, corporate taxes and independent revenues. Total federal expenditure rose 10.3% to ₦16.1 trillion. Reported capital expenditure fell to ₦700 billion. Interest and personnel costs accounted for 73.9% of total spending. The fiscal deficit narrowed to ₦9.9 trillion from ₦11 trillion a year earlier. The narrowing was partly due to subdued capital spending.
The World Bank urged the government to strengthen revenue mobilisation. It said budget credibility must improve. It warned that expensive borrowing constrains development spending. The bank said debt obligations are crowding out investment. The government has introduced tax reform bills. It has removed the petrol subsidy. It has floated the naira. These measures aim to increase revenue and reduce borrowing. They have not yet delivered the needed fiscal space.
Winners: Bondholders, who receive interest. Domestic lenders, who earn high yields. The Debt Management Office, which manages the debt. Losers: Taxpayers, whose money services debt. Infrastructure projects, which lose funding. Schools and hospitals, which face budget cuts. Future generations, who inherit the debt. Nigerians, who see no improvement in services.
Bottom Line: Interest exceeded revenue by ₦1.5 trillion. The government borrows to pay interest. Capital spending fell. Debt crowds out development. Revenue must rise. Borrowing must slow. The fiscal trajectory is not sustainable.