THE Federal Ministry of Finance has dismissed recent media reports and commentaries alleging hidden spending and diversion of federation revenue, stating that such interpretations misrepresent the findings of the latest Nigeria Development Update by the World Bank.
In a detailed clarification sent to News Point Nigeria by the Minister of State for Finance, Taiwo Oyedele, he said their attention had been drawn to claims suggesting that a significant portion of federation earnings was being “diverted” or constituted “hidden spending,” describing such assertions as inaccurate and based on a misunderstanding of Nigeria’s fiscal system.
According to the ministry, these interpretations distort the analysis contained in the World Bank report and fail to reflect the actual structure and operation of public finance management in the country.
Addressing the issue of Federation Account Allocation Committee (FAAC) deductions, the ministry explained that the misreporting incorrectly portrayed these deductions as “waste” or missing funds.
The ministry clarified that FAAC deductions, as outlined in the report, cover legitimate fiscal obligations, including 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 do not amount to leakages but represent valid fiscal flows, including repayment of obligations and allocations backed by law.
The ministry also criticised what it described as the selective use of outdated data in some commentaries, noting that certain analyses ignored the forward-looking components of the World Bank report as well as ongoing reforms in public financial management.
It pointed out that the World Bank had explicitly acknowledged reforms introduced in early 2026, including a recently signed Executive Order aimed at safeguarding the remittance of petroleum revenues.
According to the ministry, these reforms are already addressing concerns around deductions and are expected to improve transparency while increasing revenues available to all tiers of government by approximately 0.4 percent of Gross Domestic Product annually.
The ministry warned that focusing on isolated aspects of the report without recognising ongoing reforms creates a distorted narrative that does not reflect the full picture of Nigeria’s fiscal progress.
Highlighting the broader findings of the World Bank report, the ministry described the outlook as positive and forward-looking.
It noted that economic growth in Nigeria is becoming more broad-based across sectors, while inflation, though still elevated, is gradually declining due to deliberate policy measures.
The ministry further stated that Nigeria’s external position has strengthened significantly, citing improved foreign reserves and a current account surplus.
It added that debt indicators have also improved, including a decline in the country’s debt-to-GDP ratio, the first recorded in over a decade.
According to the ministry, these developments underscore the impact of the current administration’s macroeconomic policies and reforms in public financial management.
Clarifying the central message of the World Bank report, the ministry said the institution did not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed. Instead, it noted that the report affirmed that reforms are working but must be sustained and deepened to translate macroeconomic gains into inclusive growth.
Reaffirming its position, the Federal Government said it remains committed to strengthening fiscal transparency, improving revenue mobilisation, ensuring efficient public spending, and deepening reforms to support inclusive economic growth.
The ministry stressed that accurate understanding and responsible reporting of fiscal information are essential to maintaining confidence in Nigeria’s economic outlook and reform trajectory.
It also urged stakeholders, media organisations, and the public to engage constructively with fiscal information and avoid misinterpretations that could undermine reform efforts or fuel unnecessary public tension.