By: Tijani Salako.
The Federal Ministry of Finance has defended the Federal Government’s interest-to-revenue ratio of 124 per cent in the first half of 2026, describing reports suggesting the figure indicates fiscal distress as misleading.
The ministry, in a press release issued on Sunday, said the calculation compared debt servicing obligations covering multiple tiers of government with an incomplete federal revenue base, resulting in a distorted assessment of the government’s fiscal position.
According to the ministry, the interest figure includes debt serviced by the Federal Government on behalf of other tiers of government, including external loans to states, while the revenue figure excludes independent revenues earned by government agencies and enterprises but not yet remitted to the Treasury.
It also explained that government revenue typically rises in the second half of the year due to the statutory timing of certain tax payments, making a six-month comparison insufficient to determine the sustainability of public debt.
The ministry noted that the interest to revenue ratio stood at 156 per cent in the first half of 2025, while the full year debt service to revenue ratio was below 60 per cent, compared with 97 per cent before the current administration’s reforms.
It added that federal revenue rose by 72 per cent, from N3.6tn in the first half of 2025 to N6.2tn in the corresponding period of 2026, while interest payments increased by 38 per cent, from N5.6tn to N7.7tn.
The ministry said the faster growth in revenue contributed to a 32-percentage-point decline in the interest-to-revenue ratio, from 156 per cent to 124 per cent, while the gap between interest payments and revenue narrowed from N2tn to N1.5tn.
It described the development as evidence of the impact of the government’s economic reforms rather than a sign of fiscal distress.
The ministry further argued that debt sustainability should be assessed on a full-year basis rather than over six months, citing the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both interest and principal repayments, would amount to 46 per cent of revenue.
On borrowing, the ministry maintained that all Federal Government loans were obtained within the limits approved by the National Assembly under the 2026 Appropriation Act and the approved borrowing plan.
It said the borrowing process complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, adding that borrowing information was published regularly by the Debt Management Office.
The ministry welcomed public scrutiny of government finances but urged analysts and commentators to compare like with like, interpret figures within their proper context and seek clarification where data remained unclear.
