The Federal Government has dismissed reports alleging hidden spending and diversion of federation revenue, saying the claims misrepresent findings in the latest Nigeria Development Update (NDU) by the World Bank.
In a statement issued on Sunday by the Federal Ministry of Finance and signed by the Minister of State for Finance, Taiwo Oyedele, the government said the interpretation circulating in some media platforms wrongly portrayed statutory fiscal processes as revenue leakages.
“The attention of the Federal Ministry of Finance has been drawn to recent media reports and commentaries that misrepresent the findings of the latest Nigeria Development Update by the World Bank, particularly claims suggesting that a significant portion of federation earnings is being ‘diverted’ or constitutes ‘hidden spending’,” the statement said.
The ministry explained that such claims reflect a misunderstanding of Nigeria’s fiscal structure and the role of the Federation Account Allocation Committee (FAAC) in revenue distribution.
It noted that deductions from the federation account are often mischaracterised as waste or missing funds, a position it firmly rejected.
“FAAC deductions, as presented in the World Bank report, include statutory transfers, savings and investments, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), and transfers and interventions benefiting subnational governments,” it stated.
According to the ministry, these deductions are legitimate and form part of established public finance processes.
“Refunds and transfers to states and other tiers of government are not leakages. They represent legitimate fiscal flows, including repayments of obligations and statutorily backed allocations,” it added.
The government also faulted some commentators for relying on outdated figures while ignoring recent reforms introduced in 2026.
It said the World Bank report already acknowledged ongoing policy changes, including a new Executive Order aimed at improving petroleum revenue remittances.
“The World Bank explicitly notes that reforms implemented in early 2026, including the recently signed Executive Order to safeguard remittance of petroleum revenues, are already addressing concerns around deductions,” the statement said.
It added that the reforms are expected to enhance transparency and increase distributable revenues to all tiers of government by about 0.4 per cent of GDP annually.
The ministry further argued that the overall tone of the World Bank report was positive, contrary to interpretations suggesting fiscal distress.
It said the report highlighted improving economic diversification, easing inflation due to policy interventions, and a stronger external position supported by rising reserves and a current account surplus.
It also pointed to a decline in the debt-to-GDP ratio, describing it as the first improvement in over a decade.
“These developments reflect the outcomes of the current administration’s ongoing macroeconomic policies and public financial management reforms,” it said.
The ministry stressed that the World Bank did not suggest a failure of reforms, but rather indicated that ongoing measures are producing results that should be sustained.
“The World Bank does not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed. Rather, it states that reforms are working, and they must be sustained and deepened,” it added.
The statement urged media organisations, stakeholders, and the public to avoid misinterpretation of fiscal data, warning that inaccurate reporting could undermine ongoing reform efforts.
“We urge stakeholders, media organisations, and the public to engage constructively with fiscal information and avoid twisted interpretations that may undermine reform efforts and fuel public discord,” it said.
