The federal government has dismisses recent media reports and commentaries that purport to misrepresent the findings of the latest World Bank Nigeria Development Update (NDU), particularly claims suggesting that a significant portion of federation earnings is being “diverted” or constitutes “hidden spending.”
The Minister of State for Finance, Dr. Taiwo Oyedele, in a statement issued on Sunday, said the interpretations misrepresented the World Bank’s analysis and reflected a misunderstanding of the fiscal system.
“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 Minister explained that such interpretations reveal a poor understanding of Nigeria’s fiscal framework, particularly the mechanisms governing revenue distribution through the Federation Account Allocation Committee.
It reiterated that deductions from the federation account are frequently misread as waste or missing funds, a position it strongly refuted.
“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 Taiwo, these deductions represent legitimate financial operations 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.
He also criticised analysts for relying on outdated figures while overlooking reforms introduced in 2026.
It noted that the World Bank report acknowledged ongoing policy measures, including a newly signed Executive Order aimed at ensuring proper remittance of petroleum revenues.
“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 added.
He further noted that these reforms are expected to enhance transparency and boost distributable revenue to all tiers of government by approximately 0.4 per cent of GDP annually.
It further argued that the overall tone of the World Bank report was positive, contrary to suggestions of fiscal instability.
The report, it said, highlighted broader economic growth across multiple sectors, easing inflation driven by policy interventions, and an improved external position supported by stronger reserves and a current account surplus.
Taiwo also pointed to a reduction in the debt-to-GDP ratio, describing it as the first improvement recorded in more than a decade.
“These developments reflect the outcomes of the current administration’s ongoing macroeconomic policies and public financial management reforms,” it said.
It stressed that the World Bank’s findings do not indicate a breakdown of reforms but instead affirm that current efforts are producing results that need to 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.
However, he urged stakeholders, including the media, to exercise caution in interpreting fiscal data, warning that inaccurate narratives could weaken 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,” it said.
