FG dismisses World Bank “hidden spending” claims, insists fiscal reforms are on track

The Federal Government has rejected claims suggesting hidden spending and diversion of federation revenue, describing the reports as a misinterpretation of findings in the latest Nigeria Development Update by the World Bank.

In a statement issued by the Federal Ministry of Finance and signed by the Minister of State for Finance, Taiwo Oyedele, the government said recent media interpretations wrongly portrayed normal fiscal processes as financial 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 deductions from the Federation Account Allocation Committee (FAAC) are often misunderstood, stressing that they represent statutory and lawful financial obligations within Nigeria’s public finance structure.

It listed such deductions to include transfers to government agencies, security-related spending, refunds, and subnational interventions.

“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 financial flows are legitimate and should not be mischaracterised as missing or misused funds.

“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The government also faulted commentators for relying on outdated data, insisting that recent 2026 fiscal reforms are already improving transparency and revenue management.

It cited an Executive Order on petroleum revenue remittances as part of measures strengthening fiscal accountability.

“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.

The ministry added that these reforms are expected to increase distributable revenue to all tiers of government by about 0.4 per cent of GDP annually.

It further argued that the overall World Bank assessment of Nigeria’s economy was more positive than some interpretations suggest, noting improvements in economic diversification, inflation trends, external reserves, and current account position.

“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 stated.

The government urged media organisations and the public to avoid misrepresentation of fiscal data, warning that inaccurate interpretations 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,” the ministry added.