The Federal Ministry of Finance has dismissed allegations of hidden spending and diversion of federation revenue, saying recent interpretations of the World Bank Nigeria Development Update were misleading and based on misunderstanding of the fiscal system.
In a press statement signed by the Minister of State for Finance, Taiwo Oyedele, the ministry said reports claiming that large portions of federation earnings were being diverted or classified as “hidden spending” misrepresented the findings of the World Bank analysis.
The minister explained that deductions made by the Federation Account Allocation Committee (FAAC), which some commentaries described as waste or missing funds, were legitimate statutory transactions.
According to him, FAAC deductions cover statutory transfers, savings and investments, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), as well as transfers and interventions benefiting subnational governments.
Oyedele stressed that refunds and transfers to states and other tiers of government should not be regarded as leakages, noting that they represent lawful fiscal flows, including repayments of obligations and allocations backed by statute.
The ministry also accused some commentators of relying on outdated data while ignoring reforms highlighted in the World Bank report, particularly those introduced in early 2026.
It noted that the report acknowledged the impact of reforms, including a recently signed Executive Order aimed at safeguarding remittance of petroleum revenues, which is expected to improve transparency and increase revenues available to all tiers of government by about 0.4 per cent of Gross Domestic Product (GDP) annually.
The ministry further stated that the overall outlook presented in the report showed improvements in Nigeria’s macroeconomic fundamentals, including broader economic growth across sectors, declining inflation due to policy actions, and strengthened external reserves with a current account surplus.
It added that debt indicators had also improved, citing a decline in the debt-to-GDP ratio for the first time in more than a decade.
Oyedele said the World Bank did not conclude that Nigeria’s fiscal system was collapsing or that reforms had failed, but rather emphasised the need to sustain ongoing reforms to translate macroeconomic gains into inclusive growth.
He reaffirmed the Federal Government’s commitment to strengthening fiscal transparency, improving revenue mobilisation, ensuring efficient public spending and deepening reforms to support inclusive economic growth.
The ministry urged stakeholders, media organisations and the public to engage constructively with fiscal information and avoid misinterpretations that could undermine confidence in Nigeria’s reform efforts and economic outlook.
