The Federal Government has rejected reports alleging hidden spending and diversion of federation revenues, describing the claims as a misrepresentation of findings in the latest Nigeria Development Update by the World Bank.
In a statement issued in Abuja on Sunday, the Minister of State for Finance, Taiwo Oyedele, said recent media interpretations suggesting that a significant portion of federation earnings was being diverted were inaccurate and reflected a misunderstanding of Nigeria’s fiscal framework.
Oyedele explained that deductions by the Federation Account Allocation Committee (FAAC), which had been portrayed in some reports as wasteful or missing funds, are in fact legitimate and statutory components of public financial management.
He listed such deductions to include statutory transfers, savings and investment provisions, security-related expenditures, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), as well as transfers and interventions to subnational governments.
According to him, refunds and transfers to states and other tiers of government cannot be classified as leakages, as they represent lawful fiscal flows, including repayments of obligations and constitutionally backed allocations.
The minister also criticised what he described as the selective use of outdated data in some analyses, noting that the World Bank report recognises ongoing reforms aimed at improving transparency and enhancing revenue generation.
He further stated that recent reforms introduced in early 2026, including a new Executive Order on petroleum revenue remittances, were already addressing concerns around deductions and were expected to increase revenues available to all tiers of government by about 0.4 per cent of Gross Domestic Product annually.
Oyedele said Nigeria’s economic outlook continues to show gradual improvement, with growth becoming more broad-based across sectors, inflation easing, and external buffers strengthening through improved foreign reserves and a current account surplus.
He added that key debt indicators have also improved, including a reduction in the debt-to-GDP ratio for the first time in over a decade.
“The World Bank does not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed. Rather, it affirms that reforms are working and should be sustained to achieve inclusive growth,” the statement read.
The Federal Government urged media organisations and stakeholders to exercise caution and responsibility in the interpretation of fiscal data, warning that misrepresentation could undermine ongoing reforms and public confidence.
It reaffirmed its commitment to fiscal transparency, improved revenue mobilisation, and efficient public expenditure management.
