By Ayo Kehinde
The Federal Government has dismissed claims suggesting diversion or “hidden spending” of federation revenue, insisting that recent media interpretations of the latest Nigeria Development Update by the World Bank are inaccurate and misrepresent the country’s fiscal framework, particularly what it described as the “mischaracterisation of FAAC deductions as ‘waste’ or missing funds.”
The clarification was contained in a statement by the Federal Ministry of Finance on Sunday, which said the misreporting “incorrectly characterises Federation Account Allocation Committee (FAAC) deductions as ‘waste’ or missing funds,” stressing that this interpretation “is incorrect.”
Signed by Taiwo Oyedele, Minister of State for Finance, the statement emphasized that FAAC deductions are statutory fiscal flows that include clearly defined obligations within Nigeria’s public finance system. It listed components of the deductions as statutory transfers, savings and investments, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), and transfers and interventions to subnational governments.
Oyedele stressed that “refunds and transfers to states and other tiers of government are not leakages”, adding that they represent “legitimate fiscal flows, including repayments of obligations and statutorily backed allocations.”
He further noted that some public commentary relied on “selective use of outdated data,” warning that such interpretations ignore the reform measures highlighted in the World Bank report.
The statement referenced ongoing public financial management reforms, including a 2026 Executive Order aimed at safeguarding petroleum revenue remittances, which it said is already strengthening transparency and efficiency in fiscal operations.
According to Oyedele, the World Bank report acknowledged that such reforms are expected to improve transparency and increase revenues available for distribution to all tiers of government by about 0.4 per cent of Gross Domestic Product annually.
He said the broader assessment of the World Bank report remains positive, noting that “economic growth is becoming more broad-based across sectors,” while “inflation, though still elevated, is declining due to deliberate policy actions.”
The Minister also highlighted improvements in Nigeria’s external position, including stronger foreign reserves and a current account surplus, as well as a decline in the debt-to-GDP ratio, which it described as “the first in over a decade”.
Oyedele stressed that the World Bank “does not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed”, but rather that “reforms are working and must be sustained and deepened to translate macroeconomic gains into inclusive growth.”
He reaffirmed the Federal Government’s commitment to fiscal transparency, revenue mobilisation, and efficient public spending, urging stakeholders and media organisations to engage responsibly with fiscal data and avoid interpretations that could “distort public understanding of ongoing reforms or undermine confidence in the economy.”
