World Bank report: FG debunks claims of hidden spending, revenue diversion

The Federal Government has dismissed reports alleging hidden spending and diversion of federation revenue, describing them as a misrepresentation of findings contained 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, on Sunday, the government said the interpretation circulating in some media platforms wrongly characterised statutory fiscal processes as 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 read.

The ministry said such claims reflect a misunderstanding of Nigeria’s fiscal structure and how revenues are distributed through the Federation Account Allocation Committee.

According to the ministry, deductions from the federation account are often wrongly interpreted as waste or missing funds, a claim 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.

It stressed that such deductions are legitimate fiscal flows within the public finance system.

“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,” the ministry added.

The government also faulted commentators for relying on outdated figures while ignoring recent reforms introduced in 2026.

It said the World Bank report already acknowledged ongoing reforms, including a new Executive Order aimed at safeguarding 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 these reforms are projected to improve transparency and increase distributable revenues to all tiers of government by about 0.4 per cent of GDP annually.

The ministry further said the overall tone of the World Bank report was positive, contrary to interpretations suggesting fiscal distress.

It noted that economic growth is becoming more diversified across sectors, inflation is beginning to ease due to policy measures, and Nigeria’s external position has improved with stronger 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 report does not suggest a failure of reforms, but rather affirms that ongoing changes are yielding results that must 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 and stakeholders to avoid misinterpretation of fiscal data, warning that inaccurate reporting could undermine 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.