The Federal Government spent N7.7tn on interest payments in the first half of 2026, representing 124.2 per cent of its total revenue of N6.2tn during the period, according to the World Bank.

The figures indicate that interest payments alone exceeded the government’s revenue by N1.

The findings were contained in the World Bank’s October 2026 Nigeria Development Update, titled Beyond the Federal Purse: How Higher Revenues Shaped State Priorities.

The report showed that interest payments increased by N2.

The World Bank stated, “Interest payments increased to 3.1 per cent of GDP (N7.7tn) from 2.5 per cent (N5.6tn) amid high domestic borrowing costs.”

An analysis of the figures showed that the interest-to-revenue ratio declined from approximately 155.6 per cent in the first half of 2025 to 124.2 per cent in the corresponding period of 2026, representing an improvement of 31.4 percentage points.

Despite the improvement, interest obligations continued to exceed the government’s total revenue, leaving limited resources for infrastructure, public services and other expenditure commitments.

According to the report, Federal Government revenue increased by N2.6tn, or 72.2 per cent, from N3.6tn in the first half of 2025 to N6.2tn in the corresponding period of 2026.

The World Bank stated, “Federal revenues rose to about 2.5 per cent of GDP (N6.2tn), from 1.6 per cent of GDP (N3.6tn) a year earlier, supported by a recovery in oil receipts, stronger corporate tax collections, and higher independent revenues, while customs revenues held stable and VAT collections stayed comparatively flat.”

However, the increase in revenue was accompanied by rising expenditure obligations, with total federal spending climbing from N14.6tn in the first half of 2025 to N16.1tn in the corresponding period of 2026, representing an increase of N1.5tn, or 10.3 per cent.

Personnel expenditure also rose from N3.7tn to N4.2tn following wage adjustments, while reported capital expenditure declined sharply. Capital spending fell from one per cent of GDP in the first half of 2025 to 0.3 per cent, equivalent to N700bn, in the corresponding period of 2026.

This means the Federal Government spent 11 times more on interest payments than on reported capital projects during the six-month period.

Combined interest and personnel expenditure amounted to N11.9tn, representing approximately 73.9 per cent of total federal expenditure and nearly twice the government’s revenue.

Despite the rising expenditure pressures, the World Bank reported an improvement in the Federal Government’s fiscal balance, with the deficit narrowing from N11tn, or five per cent of GDP, in the first half of 2025 to N9.9tn, or four per cent of GDP, in the corresponding period of 2026.

However, the institution cautioned that the improvement was partly driven by subdued capital expenditure rather than a significant reduction in recurrent obligations.

“The improved early-year fiscal outturn should be interpreted cautiously given the low reported federal capital spending,” the report stated.

It added, “Personnel and interest costs continue to absorb a large share of fiscal space, and a pickup in capital execution later in the year, alongside recurrent and pre-election spending, is expected to add to pressures.”

The World Bank also identified overlapping budget cycles, weak expenditure planning and poor alignment between approved allocations and implementation capacity as persistent challenges affecting fiscal management.

On the broader public debt position, the report estimated Nigeria’s debt stock at approximately N177tn in 2025, equivalent to 40 per cent of GDP, compared with N67tn, or 27.6 per cent of GDP, in 2021.

It explained that exchange-rate valuation effects and the recognition of previously accumulated liabilities, including securitised Ways and Means advances, contributed significantly to the increase.

The report noted that domestic debt accounted for 57.9 per cent of the country’s debt stock but generated 72.6 per cent of interest payments in 2025, reflecting the relatively high cost of domestic borrowing.

It recommended limiting expensive borrowing, prioritising concessional financing and extending debt maturities to reduce refinancing risks.

The World Bank further projected that Nigeria’s consolidated fiscal deficit would widen from 3.1 per cent of GDP in 2025 to 3.5 per cent in 2026, driven partly by rising federal interest, personnel and pre-election spending.

It urged the government to strengthen revenue mobilisation, improve budget credibility and maintain fiscal discipline to prevent debt obligations from further constraining development spending.

The Federal Ministry of Labour and Employment has cautioned banks and insurance companies against allowing workers to bear the brunt of the ongoing recapitalisation and restructuring in the financial sector.

The Ministry made the call during the 2026 World Day for Decent Work celebration organised by the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI), at ASSBIFI House, Alausa, Ikeja, Lagos.

Speaking at the event, the Zonal Director, South-West, and State Controller of the Ministry, Mienye Badejo, said the post-recapitalisation era presented both opportunities and challenges, particularly for young workers who constitute the future of the banking and insurance industries.

Represented by an official in the ministry, Franca Shaahu, Badejo said among others: “Recapitalisation is reshaping the landscape of the banking and insurance industries across the financial sector. Young workers are at the centre of this transition and the reforms that accompany it. While these reforms are necessary to strengthen capital bases, improve technological capacity and enhance market performance, they should not come at the expense of workers’ rights, job security, fair wages, career development and respect for decent work.

“Young workers, who represent the future of the industry, face a number of challenges arising from this transition. These include potential job displacement resulting from automation and restructuring, rapid technological changes, increasing performance pressures and uncertainties associated with evolving workplace arrangements.

“The post-recapitalisation era presents both opportunities and uncertainties for young workers in the banking and insurance industries. It is therefore imperative that young workers become active participants in decision-making, policy discussions, workplace reforms, technological transitions and broader industry development.

“They should also be provided with secure employment, continuous opportunities for skills development and decent work opportunities that enable them to build sustainable careers.

The Federal Government has announced plans to eliminate multiple regulatory fees, overlapping responsibilities and bureaucratic procedures across Ministries, Departments and Agencies as part of efforts to reduce the cost of doing business and attract investment.

The government also plans to introduce measurable performance targets for MDAs, requiring agencies to improve service delivery, eliminate unnecessary administrative requirements and demonstrate greater accountability in their operations.

This was disclosed in a statement issued on Sunday by the Head of the Information and Public Relations Unit of the Federal Ministry of Finance, Efe Ovuakporie, following a strategic engagement on Thursday between the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, and heads of government agencies in Abuja.

According to the statement, Oyedele directed agencies to operate strictly within their statutory mandates and eliminate duplicate requirements, multiple fees and unnecessary procedures that impose additional costs on businesses.

“Where mandates overlap, he said, the goal should be one lead agency, one process and one fee,” the statement read.

The minister explained that the initiative would operate under a “One Government” framework, requiring MDAs to coordinate their activities rather than subject businesses and investors to conflicting regulatory demands.

He maintained that Nigeria’s economic reform agenda must move beyond macroeconomic stabilisation to address operational challenges confronting businesses in their interactions with government institutions.

Oyedele stressed that public agencies must facilitate business operations, investment and expansion rather than create additional obstacles through administrative inefficiencies.

As part of the proposed reforms, the minister directed agencies to consult relevant stakeholders before introducing new regulations and assess their potential economic implications.

He also urged regulators to coordinate with other institutions and provide adequate notice before implementing major policy changes to minimise disruptions to businesses.

On public financial management, Oyedele directed agencies to ensure the prompt and complete remittance of government revenues, transfer operating surpluses to the Consolidated Revenue Fund and submit audited financial statements in accordance with existing laws.

The minister further disclosed that agency performance would be assessed using measurable indicators, including service delivery timelines, compliance with published processing periods and reductions in regulatory costs.

He acknowledged that the Ministry of Finance must also address its internal administrative challenges, including delayed approvals, slow fund releases and outdated operational regulations.

According to the statement, the ministry will review submissions received from participating agencies and communicate specific feedback within four to six weeks.

The ministry will then circulate a draft performance framework for further consultation, after which individual agencies will be required to agree on measurable commitments.

The ministry will subject these commitments to periodic reviews to determine compliance and assess improvements in service delivery.

The ministry explained that the initiative aimed to strengthen institutional accountability, improve regulatory coordination and create a more predictable business environment.

It added that reducing bureaucratic delays and regulatory costs would allow businesses to devote more resources to productive investment, expansion and job creation.