What will Nigerians have left before they vote in 2027? Nearly ₦54 of every ₦100 in government revenue could go to debt interest

By Daniel Nduka Okonkwo

Nigeria’s debt story is often dressed up with reassuring headlines about a “low debt-to-GDP ratio” of roughly 32.3%, comfortably below global risk thresholds. But this framing is deeply misleading. GDP is not cash in the treasury, it is simply the total value of goods and services produced in the economy. What matters for debt sustainability is government revenue, and Nigeria’s revenue base is dangerously narrow. The more revealing metric, the Debt Service-to-Revenue ratio, shows that more than half of every naira collected is swallowed immediately by interest payments, leaving little room for infrastructure or social investment. This reality exposes the government’s narrative of borrowing for development as incomplete, since much of the borrowing is used to roll over old debts and sustain political overheads, while budgets are built on over-optimistic oil revenue targets that rarely materialize.

Nigeria is entering 2026 carrying a fiscal burden that officials rarely explain to citizens in terms they can feel in their pockets. According to the Debt Management Office, the country spent approximately ₦3.14 trillion on domestic debt servicing and $954.06 million on external debt servicing in the first quarter of the year alone. President Bola Tinubu has stated that total debt servicing for the full year is projected to reach $11.6 billion, while the approved 2026 Federal Budget sets aside ₦15.8 trillion for debt obligations, a figure that outstrips what the government proposed for defense, infrastructure, education, and healthcare combined when the budget was first presented to the National Assembly in December 2025.

The domestic figure represents a 20.3 percent increase from the same period in 2025. Of the ₦3.14 trillion spent servicing domestic debt in the first quarter, interest payments alone swallowed ₦2.97 trillion, or roughly 95 percent of the total, while principal repayments accounted for just ₦169.68 billion. On the external side, the $954.06 million spent represented a 31.5 percent decline from the first quarter of 2025, made up of $623.22 million in interest payments, $308.33 million in principal repayment, and $22.50 million in other service charges. In effect, Nigeria is paying enormous sums simply to keep existing loans serviced, with very little of that money going toward actually reducing what the country owes.

This is happening even as government revenue has grown. Between January and July 2026, Nigeria generated an unprecedented ₦27.1 trillion, equivalent to about $19.93 billion, in tax revenue, a seven-month haul that already equals nearly 96 percent of everything collected in the entire 2025 fiscal year. Value Added Tax collection alone spiked by nearly 10 percent in the first quarter, bringing in ₦2.42 trillion. On paper, this looks like a government finally getting its revenue house in order. But the growth in collection has not translated into breathing room, because a rising share of every naira collected is immediately owed to creditors before it can be spent on anything else.

That is the story behind the number now worrying economists. Nigeria’s interest-to-revenue ratio for 2026, projected by the International Monetary Fund, stands at 53.7 percent, up from 53.2 percent in 2025 and a sharp climb from 40.8 percent in 2024. In plain terms, for every ₦100 the federal government collects in revenue, more than ₦53 is already spoken for, destined for interest payments to creditors, before a single naira reaches roads, hospitals, classrooms, or salaries. It helps to think of Nigeria as a household. If a family earns ₦100 this month but must pay ₦53.70 in interest on money it has borrowed, it is left with only ₦46.30 to cover food, school fees, medical bills, house repairs, and transport for everyone in the home. Crucially, that ₦53.70 is only the interest, not the repayment of what was originally borrowed.

Scale that household math up to a nation and the danger becomes clear. If a family needs ₦20 for food, ₦10 for school, ₦10 for medicine, and ₦15 to repair a leaking roof, that is ₦55 in basic needs, yet only ₦46.30 remains after interest is paid. The family is already ₦8.70 short before it has bought a single item. That is essentially the position the Nigerian government finds itself in, forced to squeeze infrastructure, healthcare, education, and security spending into whatever is left after creditors have taken their share. It is worth noting that 53.7 percent is a ratio comparing interest expense to revenue rather than a literal claim that ₦53.70 out of every physical ₦100 collected is handed over immediately, and that the figure is an IMF projection for the year rather than an audited final result. Even so, the direction it points to is unmistakable.

The consequences are already visible in how the budget is structured. When President Tinubu presented the original 2026 budget proposal to the National Assembly in December 2025, it earmarked ₦5.41 trillion for defense and security, ₦3.56 trillion for infrastructure, ₦3.52 trillion for education, and ₦2.48 trillion for health, a combined ₦14.97 trillion across all four priorities. That is only marginally below the ₦15.8 trillion the final, expanded ₦68.32 trillion budget sets aside for debt servicing alone, underlining just how much of the government’s fiscal space is consumed by creditors before a naira reaches any of the sectors citizens depend on. The IMF projects that federal capital expenditure will amount to only about 3.8 percent of GDP in 2026, and warns that sustaining even this level of investment will be difficult without stronger revenue growth. Debt interest does not directly strip money from a school or a hospital in any single accounting line, but it does mean the government has far fewer resources left to allocate across all the competing priorities that citizens depend on.

The squeeze also feeds a dangerous cycle. When government revenue falls short of what it needs to spend, it must borrow to cover the gap. The IMF projects Nigeria’s consolidated government deficit at 4.7 percent of GDP in 2026, part of a wider ₦31.45 trillion deficit within an expanded ₦68.32 trillion budget framework, with the government projecting only about ₦36.87 trillion in revenue against that spending. That new borrowing then carries its own interest, which competes for revenue the following year, pushing the government to borrow again. Borrow, pay interest, have less money available, borrow again, accumulate more interest. One path out of that cycle is to raise more revenue, and the IMF has specifically called for continued revenue mobilisation, including changes to VAT and other tax policies, as essential to creating fiscal space. For ordinary Nigerians already dealing with the cost of living, that points toward greater tax pressure ahead, driven in part by the expansion of electronic collection systems such as TaxPro Max.

There is also a quieter cost to the private sector. Heavy government borrowing from the domestic market competes directly with businesses for the same pool of available credit, and the IMF has warned that this borrowing can crowd out private lending. In practical terms, when the government needs money, banks buy government securities instead of extending loans to entrepreneurs, leaving less lending capacity for the small and medium businesses that create the bulk of Nigerian jobs. Weaker private investment, combined with inadequate infrastructure and expensive credit, slows business expansion, productivity, and job creation over time. Nigeria’s exposure grows even more pronounced given how reliant government revenue remains on oil. The IMF projects federal government revenue at only 4.9 percent of GDP in 2026, with oil revenue contributing just 1.6 percent of that figure, meaning that any drop in oil prices or production shortfalls, a familiar problem in Nigeria due to theft and capacity constraints, could weaken revenue further while debt obligations remain fixed.

Officials often point to Nigeria’s debt-to-GDP ratio, which the IMF’s April 2026 Fiscal Monitor placed at around 32.3 percent, as evidence that the country’s debt position is comfortably below international risk thresholds. It is worth noting that the IMF’s own 2026 Article IV Consultation, concluded on June 1 and published on June 9, roughly two months after the Fiscal Monitor, projected a somewhat higher 2026 debt-to-GDP figure of 35.4 percent, a reminder that even the Fund’s numbers shift depending on which report and which vintage of assumptions they are drawn from. Either way, the broader point holds. Gross Domestic Product measures the total value of goods and services produced across the economy, much of which is never available to the government as cash. A country cannot repay a loan with GDP, only with actual revenue collected. While Nigeria’s GDP appears large on paper, inflated partly by inflation and nominal adjustments, its real revenue base remains dangerously narrow, which is precisely why the debt service to revenue ratio tells a more honest story than debt to GDP. Historically, government presentations to the public and to the National Assembly have emphasised capital expenditure allocations while saying far less about the debt service to revenue burden, which, on some estimates, has approached two out of every three naira collected in past years before infrastructure work even begins. That estimate is not an official DMO or IMF figure so much as a rough measure of how the burden has felt to close observers of the budget process, but it captures something the official 53.7 percent interest to revenue figure already confirms on its own. Borrowing requests are frequently framed around deficit financing for key national priorities, language that omits the reality that a large share of new debt is simply used to roll over old obligations and sustain the cost of governance itself. Compounding this, government budgets are routinely built on optimistic revenue assumptions, including oil production targets Nigeria rarely meets, a pattern that allows bloated budgets to pass on paper while setting up later revenue shortfalls that force unplanned emergency borrowing.

The real crisis facing Nigeria is not simply that the country owes a large amount of money. It is that government revenue is comparatively small while its financial obligations are large, so that even a debt-to-GDP ratio that looks manageable in isolation cannot capture how severely debt servicing costs are cutting into what the government can actually spend. A family earning ₦100,000 a month with ₦54,000 of that income already committed to loan interest is not bankrupt, but it has very little left to live on. That is essentially the fiscal squeeze facing Nigeria today, and it is a squeeze that will be felt not in abstract economic indicators but in underfunded hospitals, overcrowded classrooms, deteriorating roads, tighter access to credit for small businesses, and a tax burden that keeps climbing even as the services the government is meant to provide keep shrinking.
Daniel Nduka Okonkwo is an investigative journalist, human rights advocate, and policy analyst based in Abuja, Nigeria. He is the publisher of Profiles International Human Rights Advocate, a platform focused on accountability journalism, governance reporting, and the documentation of human rights issues across Africa. His work examines the intersection of political power, institutional accountability, systemic failure, and the human impact of corruption, with particular focus on Nigeria and the wider African continent.
Okonkwo’s reporting and analysis have been published in Sahara Reporters, African Defence Forum, Daily Trust, Vanguard, Daily Intel, Opinion Nigeria, African Angle, Local Newsbreak, and other international media outlets. His work is driven by a commitment to transparency, democratic governance, and justice. He also collaborates with Daniels Entertainment on human rights initiatives, extending his advocacy beyond traditional journalism into broader public engagement.
He is based in Abuja, Nigeria, and can be reached at dan.okonkwo.73@gmail.com.