The Federal Ministry of Finance has responded to recent media reports alleging hidden spending and diversion of federation revenue, describing such claims as inaccurate and based on a misinterpretation of the latest Nigeria Development Update by the World Bank.
According to the Ministry, suggestions that a significant portion of federation earnings is being diverted or classified as “hidden spending” do not reflect the actual findings of the report and instead reveal a misunderstanding of Nigeria’s fiscal framework.
Central to the misinterpretation is the treatment of deductions by the Federation Account Allocation Committee (FAAC), which some commentaries have wrongly described as waste or missing funds. The Ministry clarified that these deductions are legitimate fiscal obligations and include statutory transfers, savings and investments, security expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), as well as transfers and interventions that benefit subnational governments.
It stressed that such refunds and allocations are not leakages but lawful financial flows, including repayments and constitutionally backed disbursements across different tiers of government.
The Ministry also noted that some analyses relied on outdated data while overlooking ongoing reforms highlighted in the World Bank report. These include measures introduced in early 2026, such as an Executive Order aimed at safeguarding petroleum revenue remittances. The reforms are expected to enhance transparency and increase revenues available to all tiers of government by approximately 0.4 percent of GDP annually.
Highlighting the broader outlook, the Ministry pointed to improving macroeconomic indicators cited in the report. These include more diversified economic growth, a gradual decline in inflation driven by policy measures, a stronger external position with improved reserves and current account surplus, and a reduction in the debt-to-GDP ratio—the first in over a decade.
The Ministry emphasized that the World Bank report does not suggest a failing fiscal system but instead acknowledges that reforms are yielding results and should be sustained to ensure inclusive growth.
Reaffirming its commitment, the Federal Government stated it will continue to strengthen fiscal transparency, enhance revenue mobilisation, and ensure efficient public spending. It also called on stakeholders and media organisations to engage responsibly with fiscal data and avoid misleading interpretations that could undermine public confidence and reform efforts.
