FG Denies ‘Hidden Spending’ Claims, Says World Bank Report Misinterpreted

The Federal Ministry of Finance has dismissed recent claims alleging hidden spending and diversion of federation revenue, describing them as a misinterpretation of findings contained in the latest Nigeria Development Update by the World Bank.
In a statement issued by the Minister of State for Finance, Taiwo Oyedele, the ministry said media reports and commentaries suggesting that a significant portion of federation earnings was being diverted were inaccurate and misleading.
The ministry clarified that such interpretations reflect a poor understanding of Nigeria’s fiscal system and do not align with the conclusions of the World Bank report.
According to the statement, deductions from the Federation Account Allocation Committee (FAAC) had been wrongly portrayed as waste or missing funds. It stressed that these deductions are legitimate and form part of established fiscal processes.
The ministry explained that FAAC deductions include 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 that benefit subnational governments.
It emphasised that refunds and transfers to states and other tiers of government should not be seen as leakages, noting that they represent lawful fiscal flows, including repayments of obligations and allocations backed by statute.
The statement also faulted what it described as the selective use of outdated data in some commentaries, which it said ignored recent reforms and forward-looking aspects of the World Bank’s analysis.
It noted that the report acknowledged ongoing public financial management reforms introduced in early 2026, including a new Executive Order aimed at safeguarding the remittance of petroleum revenues.
These reforms, according to the ministry, are already addressing concerns around revenue deductions and are expected to enhance transparency while increasing funds available for distribution to all tiers of government by about 0.4 per cent of Gross Domestic Product annually.
The ministry warned that focusing on isolated aspects of the report without recognising ongoing improvements gives a distorted picture of Nigeria’s fiscal position.
Highlighting broader findings, the ministry said the World Bank report presented a positive and forward-looking outlook for the Nigerian economy.
It stated that economic growth is becoming more broad-based across sectors, while inflation, though still elevated, is on a downward trend due to deliberate policy measures.
The report also pointed to a stronger external position, with improved foreign reserves and a current account surplus, alongside better debt indicators, including a decline in the debt-to-GDP ratio for the first time in over a decade.
According to the ministry, these developments reflect the impact of ongoing macroeconomic policies and public financial management reforms being implemented by the current administration.
It added that the World Bank did not conclude that Nigeria’s fiscal system was failing, but rather affirmed that reforms are yielding results and should be sustained and deepened to achieve inclusive growth.
The Federal Government reiterated its commitment to enhancing fiscal transparency, improving revenue mobilisation, and ensuring efficient public spending.
It also urged stakeholders, media organisations, and the public to engage responsibly with fiscal information and avoid misinterpretations that could undermine confidence in Nigeria’s economic reform efforts.