States’ six-month debt servicing bill hits N800bn

State governments spent N800.42bn servicing debt in the first half of 2026, representing a 39.5 per cent increase over the N573.66bn recorded in the corresponding period of 2025, an analysis by The PUNCH has shown.

The analysis of state budget implementation reports showed that debt-service payments increased by N226.75bn between January and June, outpacing growth in both recurrent revenue and total expenditure across the 33 states with comparable figures.

Lagos accounted for nearly one-third of the payments and more than four-fifths of the year-on-year increase, while 10 states recorded debt-service bills higher than their internally generated revenue.

The findings indicate that repayments absorbed a growing share of state resources, although the pressure varied considerably across the states.

The PUNCH examined cumulative first-half actual receipts and expenditure in the second quarter budget implementation reports, rather than annual budget provisions or spending during April to June alone.

Debt service covers payments reported under public debt charges, including domestic and foreign interest and principal repayments.

Although reports were obtained for 34 states for the first half of 2026, Akwa Ibom did not separately disclose debt-service payments. Comparable first-half reports were not located for Osun in 2026 or Rivers in either year.

Consequently, the debt-service comparison covers the same 33 states in both periods.

Lagos recorded the highest debt-service payments at N261.80bn, up from N76.78bn in H1 of 2025.

This represented an increase of N185.02bn, or approximately 241 per cent. The state accounted for 32.7 per cent of the N800.42bn paid by the 33 states and 81.6 per cent of the aggregate increase.

The concentration was significant. Excluding Lagos, debt servicing across the remaining 32 states increased by approximately 8.4 per cent, considerably below the overall growth rate of 39.5 per cent.

Taraba ranked second, spending N40.75bn, followed by Kaduna with N40.29bn, Edo with N37.66bn and Ogun with N32.84bn.

Together, the five states paid N413.35bn, accounting for 51.6 per cent of the total.

Other major payers included Cross River, which spent N32.01bn; Bauchi, N31.21bn; Borno, N28.54bn; Niger, N26.72bn; Bayelsa, N24.99bn; and Benue, N24.81bn.

However, the largest payments did not necessarily indicate the greatest pressure relative to revenue.

Lagos generated N1.17tn internally and reported N501.09bn in FAAC receipts during the period. Its debt-service bill was equivalent to 22.5 per cent of IGR and 15.7 per cent of combined IGR and FAAC receipts.

By comparison, Taraba’s much smaller repayment bill exceeded its entire internally generated revenue by nearly three times.

At the lower end, Nasarawa recorded the smallest debt-service payments at approximately N2bn, followed by Jigawa with N2.39bn and Kebbi with N2.61bn.

Oyo paid N4.47bn, Zamfara N5.77bn and Abia N5.82bn.

The analysis showed that 10 states could not have covered their reported first-half debt-service payments using IGR alone.

They were Taraba, Bauchi, Borno, Adamawa, Benue, Gombe, Bayelsa, Sokoto, Cross River and Yobe.

The states represented 30.3 per cent of the 33 assessed.

Together, they reported approximately N239.5bn in debt-service payments against N163.4bn in IGR, leaving a combined gap of about N76.2bn.

Taraba recorded the widest shortfall. Its N40.75bn debt-service bill exceeded IGR of N13.88bn by approximately N26.87bn. Payments were equivalent to about 294 per cent of internally generated revenue.

Bauchi followed with debt-service payments of N31.21bn against IGR of N13.82bn, producing a gap of approximately N17.39bn.

Borno spent N28.54bn servicing debt but generated N16.59bn internally, leaving a shortfall of N11.95bn.

Adamawa recorded payments of N15.68bn against IGR of N10.45bn, while Benue paid N24.81bn against internally generated revenue of N21.32bn.

Gombe’s debt-service bill stood at N19.77bn, compared with IGR of N17.15bn. Bayelsa paid N24.99bn against IGR of N22.51bn, while Sokoto spent N10.67bn against internally generated revenue of N8.52bn.

Yobe recorded debt-service payments of N11.10bn against IGR of N8.45bn. Cross River’s N32.01bn repayment bill also exceeded its N30.68bn IGR.

The comparison highlights the importance of federal allocations and other receipts in financing these states’ obligations. It does not establish that they defaulted or lacked sufficient total revenue to meet repayments.

Among states whose IGR exceeded debt servicing, the payments still represented substantial portions of internally generated funds.

Niger’s debt-service bill was equivalent to about 80 per cent of IGR, compared with approximately 78 per cent in Plateau and 73 per cent in Kaduna.

These ratios measure the scale of repayments against internally generated revenue. They do not establish which particular revenue source was used to settle each obligation.

Across the same 33 states, total expenditure increased from N6.99tn in the first half of 2025 to N8.18tn in the corresponding period of 2026.

Debt servicing absorbed 9.8 per cent of expenditure, up from 8.2 per cent a year earlier.

This means nearly N10 of every N100 spent by the states went towards servicing debt, compared with approximately N8 in the corresponding period of 2025. (Punch)