Nigeria's fiscal crisis has deepened to critical levels. Between January and June 2026, the Federal Government collected N6.2 trillion in revenue but spent N7.7 trillion on debt interest alone, according to the World Bank's October Nigeria Development Update. Interest payments consumed 124.2 per cent of revenue, exceeding total receipts by N1.5 trillion.
The interest bill rose sharply by 37.5 per cent from N5.6 trillion in the first half of 2025, even as revenue improved by 72.2 per cent from N3.6 trillion. Despite the revenue gain, the government could not cover interest payments from its own income. The interest-to-revenue ratio fell from about 155.6 per cent to 124.2 per cent, but fiscal health remained fragile.
Capital spending has been sacrificed to meet debt obligations. Federal Government total spending rose from N4.6 trillion in the first half of 2025 to N16.1 trillion in the same period of 2026. Interest and personnel costs together reached N11.9 trillion or 73.9 per cent of total federal expenditure. Capital expenditure collapsed from one per cent of GDP in the first half of 2025 to 0.3 per cent in the corresponding period of 2026, amounting to roughly N700 billion. The government spent about 11 times more on interest payments than on reported capital projects.
The World Bank estimated public debt at about N166.7 trillion in the second half of 2026, compared with N67 trillion in 2021. Domestic obligations made up 57.9 per cent of Nigeria's public debt stock in 2025 but accounted for 72.6 per cent of interest payments. The IMF projects federal interest payments at 53.7 per cent of federal revenue for 2026.
For 2026, the approved budget shows expenditure of N68.32 trillion against projected revenue of N36.87 trillion, leaving a deficit of about N31.45 trillion. Debt servicing alone is budgeted at about N15.8 trillion. The Finance Minister Taiwo Oyedele said the World Bank presented an incomplete picture of debt servicing, arguing that it excludes some government revenue and combined debt obligations across government tiers.
For Nigerian savers, borrowers and businesses, high government borrowing costs reduce credit availability for productive enterprises, weaken investment and constrain economic growth.