The Federal Government has rejected the World Bank’s assessment of Nigeria’s debt burden, insisting that claims that interest payments consumed 124 per cent of federal revenue in the first half of 2026 are misleading, even as fresh financing documents reveal that repayment of a $1.25bn World Bank loan will begin in December 2031 and continue until June 2060.
The Federal Ministry of Finance argued that the debt assessment relied on incomplete revenue figures and included interest obligations the Federal Government services on behalf of state governments.
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 response followed the World Bank’s October 2026 Nigeria Development Update, which reported Federal Government revenue of N6.2tn and interest payments of N7.7tn between January and June 2026.
An analysis of the figures by The PUNCH showed that interest payments represented approximately 124.2 per cent of federal revenue, exceeding revenue by N1.5tn. The ratio was calculated from the published figures and was not expressly stated by the World Bank.
However, the ministry dismissed the conclusion as misleading, arguing that the comparison failed to account for differences in the coverage of revenue and debt obligations.
“The interest figure includes debt the Federal Government services on behalf of other tiers of government, including external loans to states,” the ministry said, adding that comparing such obligations with federal revenue alone overstated the ratio.
The ministry also argued that the revenue figure excluded earnings generated by government agencies and enterprises but not yet remitted to the Treasury.
It further maintained that statutory tax-payment schedules meant some revenue was collected predominantly in the second half of the year, making first-half figures an incomplete basis for assessing annual debt sustainability.
According to the ministry, the interest-to-revenue ratio declined from 156 per cent in the first half of 2025 to approximately 124 per cent in the corresponding period of 2026.
It said federal revenue rose by 72 per cent, from N3.6tn to N6.2tn, while interest payments increased by 38 per cent, from N5.6tn to N7.7tn.
The ministry said the figures demonstrated that revenue was growing faster than interest obligations and that the gap between the two had narrowed from N2tn to N1.5tn.
“This is the result of reforms working, not a sign of fiscal distress,” it declared.
The government also argued that the full-year debt-service-to-revenue ratio had fallen below 60 per cent, compared with 97 per cent before the current administration’s reforms.
It rejected the use of a six-month fiscal snapshot as a definitive measure of debt sustainability, pointing instead to the World Bank’s projection that Nigeria’s full-year 2026 debt service, covering both principal and interest, would amount to 46 per cent of revenue.
The ministry also defended the administration’s borrowing programme, insisting that all loans obtained under President Bola Tinubu were lawful, approved by the National Assembly and within the limits authorised under the 2026 Appropriation Act and the approved borrowing plan.
It added that borrowing complied with the Fiscal Responsibility Act 2007 and the Debt Management Office (Establishment) Act 2003, with details of public debt regularly published by the Debt Management Office.
However, the ministry did not provide revised revenue and interest-payment figures or an alternative calculation to substantiate its challenge to the published 124 per cent ratio.
$1.25bn World Bank Loan: Repayment Begins in 2031
Meanwhile, financing agreements reviewed by The PUNCH show that Nigeria will begin repaying the principal on a $1.25bn World Bank loan on December 15, 2031, with the final instalment on one of the facilities due on June 15, 2060.
The facility, approved under the Nigeria Actions for Investment and Jobs Acceleration Development Policy Financing programme, is designed to support economic reforms targeting access to credit, electricity supply, trade competitiveness and government revenue.
The loan is the second-largest single World Bank facility secured by Nigeria under the Tinubu administration, following the $1.5bn Reforms for Economic Stabilisation to Enable Transformation Development Policy Financing approved in June 2024.
The $1.25bn package comprises a $750m concessional credit from the International Development Association and a $500m loan from the International Bank for Reconstruction and Development, both members of the World Bank Group.
The agreements were signed on behalf of Nigeria by Oyedele on October 6, 2026, while the World Bank’s Country Director, Mathew Verghis, signed on June 30, 2026.
How Nigeria Will Repay the Loan
Under the IDA agreement, Nigeria will repay 2.5 per cent of the $750m credit every six months, beginning on December 15, 2031, and ending on June 15, 2051.
Each instalment amounts to $18.75m, equivalent to $37.5m annually during full repayment years, excluding interest and other applicable charges.
The $500m IBRD facility has a longer repayment period, running from December 15, 2031, to June 15, 2060.
Its repayment schedule provides for semi-annual principal instalments of 1.72 per cent, equivalent to approximately $8.6m every six months, followed by a final instalment of 1.96 per cent, or about $9.8m, in June 2060.
Combined, the two facilities will require principal repayments of approximately $27.35m every six months between December 2031 and June 2051, amounting to $54.7m annually during full repayment years.
The repayment obligations will extend across several future administrations, with the final principal instalment on the IBRD loan due nearly 34 years after the agreements were signed.
However, the repayment schedules cover principal only and do not represent the total cost of borrowing.
The eventual cost will also depend on interest rates, applicable charges and other contractual provisions.
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 the agreement’s applicable provisions.
The IBRD loan also attracts a 0.25 per cent front-end fee, 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 documents do not specify a fixed dollar amount for total interest payments over the repayment period.
Disbursement Tied to Economic Reforms
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 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.
Release of the second tranche depends on satisfactory progress in implementing the programme, maintaining an adequate macroeconomic framework and completing agreed policy actions.
Under the IBRD agreement, the World Bank may cancel part or all of the undisbursed balance if the government fails to take satisfactory corrective measures within 90 days of receiving notice from the lender.
Both agreements have a closing date of December 31, 2027.
Trade, Tax and Electricity Reforms
The financing agreements identify two broad areas of reform: improving access to financial credit, digital services and electricity, and strengthening Nigeria’s competitiveness through trade, taxation and agricultural reforms.
The measures include implementation of the Investment and Securities Act 2025, the National Integrated Electricity Policy, electricity metering reforms and regulations designed to encourage private investment in interconnected mini-grids.
On trade, Nigeria committed to 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.
The agreements also 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 to 25 per cent.
World Bank Imposes Reporting and Audit Requirements
The financing arrangements also require the Federal Government to maintain dedicated dollar accounts for receiving loan proceeds and ensure that equivalent amounts are reflected in its budget management system.
The 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.
The World Bank financing is intended to support Nigeria’s economic reform programme, but access to the funds remains tied to satisfactory implementation of agreed measures and maintenance of an adequate macroeconomic policy framework.
