States’ six-month debt servicing bill hits N800bn

For a state government, servicing debt means making the payments required on its public borrowing. The payments include interest and principal on both domestic and foreign debt. The analysis counted these amounts under public debt charges in state budget implementation reports.

The mechanism is straightforward. When a state has debt-service obligations, it must use reported receipts to meet those scheduled costs. Lagos paid N261.80bn in the first half of 2026, while Taraba paid N40.75bn. These figures show the cash required to manage existing debt, not new borrowing.

Debt servicing matters because repayments take a growing share of state resources. Across 33 states, payments reached N800.42bn, up 39.5 per cent from the same period in 2025. The pressure differed sharply. For 10 states, debt service exceeded internally generated revenue, showing how heavily repayments can rely on federal allocations and other receipts.

The 33 comparable states paid N800.42bn in debt service between January and June 2026. This covered reported domestic and foreign interest and principal repayments. The comparison used cumulative first-half actual receipts and spending from second-quarter budget implementation reports, rather than annual provisions or second-quarter spending alone.

The bill was N573.66bn in the first half of 2025. It therefore increased by N226.75bn in one year. Debt-service growth outpaced growth in both recurrent revenue and total expenditure across the states with comparable figures.

The total also hides a sharp concentration. Lagos paid N261.80bn, or 32.7 per cent of the combined amount. Excluding Lagos, payments across the other 32 states rose by about 8.4 per cent, far below the overall 39.5 per cent increase. This makes Lagos the main driver of the national rise.

Lagos accounted for such a large share because its own debt-service payment increased exceptionally sharply. The state paid N261.80bn in the first half of 2026, compared with N76.78bn during the same period in 2025.

That difference was N185.02bn, or approximately 241 per cent. Across all 33 states, the increase was N226.75bn. Lagos therefore supplied 81.6 per cent of the aggregate rise, even though it represented 32.7 per cent of total payments. The figures explain the concentration without identifying a specific cause for Lagos’s larger payment.

The wider comparison reinforces the point. Debt servicing across the other 32 states increased by approximately 8.4 per cent when Lagos was excluded. Lagos’s unusually large year-on-year increase thus lifted the combined growth rate to 39.5 per cent. It was the dominant factor behind the national result.

The greatest pressure appeared where debt-service payments were large compared with internally generated revenue, or IGR. Taraba ranked highest among the reported states. Its N40.75bn debt-service bill was nearly three times its N13.88bn IGR, equal to about 294 per cent.

Bauchi followed with N31.21bn in debt service against N13.82bn in IGR. Borno paid N28.54bn while generating N16.59bn internally. Adamawa, Benue, Gombe, Bayelsa, Sokoto, Yobe and Cross River also had debt-service payments above IGR. Together, these 10 states reported N239.5bn in payments against N163.4bn in IGR.

Pressure was also high in states where IGR exceeded debt service. Niger’s payments equalled about 80 per cent of IGR, compared with approximately 78 per cent in Plateau and 73 per cent in Kaduna. These ratios show repayment scale, not the exact revenue source used.

When debt servicing absorbs a larger share of a state’s resources, fewer funds remain flexible for other government spending. The key issue is not only the size of the repayment, but how much of available revenue it consumes. This can make budgets more constrained, especially where internally generated revenue is low.

The article gives a clear example in Taraba. Its N40.75bn debt-service bill was about 294 per cent of its N13.88bn IGR. Across 10 states, payments totalled approximately N239.5bn against N163.4bn in IGR. Those figures show why states may need federal allocations and other receipts to meet obligations.

The pressure was increasing in the period studied. Debt service across the 33 states rose 39.5 per cent, faster than growth in recurrent revenue and total expenditure. The article does not provide a full breakdown of which programmes were reduced, but the growing repayment share indicates tighter room for competing priorities.

Internally generated revenue is not the same as a state’s total receipts. A state can collect less through its own revenue sources than it owes in debt service, while still receiving money from federal allocations or other channels. Therefore, the comparison identifies pressure, not an inability to pay.

The article reports that 10 states had debt service above IGR. Taraba paid N40.75bn against N13.88bn in IGR, creating a gap of about N26.87bn. Yet the article specifically says this does not establish that Taraba, or the other states, defaulted or lacked sufficient total revenue.

The comparison matters because it shows dependence on wider receipts. Federal allocations and other receipts can help cover obligations beyond what a state raises internally. The reported figures do not identify which particular revenue source paid each debt bill. They show the scale of repayment relative to IGR, not payment failure.

Internally generated revenue, or IGR, is revenue raised within the state and reported by its government. FAAC receipts are another category of money received by states. Together, they provide a fuller view of the resources available for obligations than IGR alone.

Lagos illustrates the difference. It generated N1.17tn internally and reported N501.09bn in FAAC receipts during the first half of 2026. Its N261.80bn debt-service bill equalled 22.5 per cent of IGR and 15.7 per cent of combined IGR and FAAC receipts. The second ratio is lower because it includes both sources.

This distinction is especially important for states with low IGR. Ten states had debt-service payments above their internally generated revenue, but the article says federal allocations and other receipts help finance such obligations. The figures do not reveal which exact source paid each debt, only why total receipts matter.