Federal Ministry of Finance has dismissed recent claims suggesting that Nigeria is diverting federation revenue, describing such interpretations as inaccurate and based on a misreading of the World Bank’s latest Nigeria Development Update.
In a statement issued on Saturday, the Honourable Minister of State for Finance, Taiwo Oyedele, said the reports alleging “hidden spending” and diversion of funds do not reflect the actual findings of the World Bank.
According to the ministry, the attention of the Federal Government was 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 stressed that “these interpretations misrepresent the World Bank’s analysis and reflect a misunderstanding of the fiscal system.”
*FAAC Deductions Not Missing Funds*
The ministry also addressed what it described as the mischaracterisation of deductions made by the Federation Account Allocation Committee (FAAC), noting that such deductions are legitimate fiscal transactions rather than missing or wasted funds.
It explained that FAAC deductions outlined 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), as well as transfers and interventions benefiting subnational governments.
The statement emphasised that these deductions are part of Nigeria’s fiscal structure and not leakages.
“It is important to emphasise that 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 said.
*Outdated Data Used in Commentary*
The ministry further accused some commentators of relying on outdated information while ignoring ongoing fiscal reforms highlighted in the World Bank report.
According to the statement, the World Bank acknowledged that reforms introduced in early 2026, including the recently signed Executive Order to safeguard remittance of petroleum revenues, are already addressing concerns around deductions.
The report, the ministry noted, projects that these reforms are expected to improve transparency and increase revenues available to all tiers of government by about 0.4 percent of Gross Domestic Product annually.
“Misinterpreting one aspect of the analysis without acknowledging the progressive reforms and measures already introduced to enhance distributable federation revenues gives a distorted picture,” the statement added.
*World Bank Report Shows Improving Economy*
The ministry also highlighted positive macroeconomic indicators identified in the World Bank report, describing them as evidence that reforms are yielding results.
Among the improvements cited were broad-based economic growth across sectors, declining inflation due to policy actions, stronger external reserves, and a current account surplus.
The ministry further noted that Nigeria’s debt indicators have improved, including a decline in the debt-to-GDP ratio — the first recorded reduction in more than a decade.
“These developments reflect the outcomes of the current administration’s ongoing macroeconomic policies and public financial management reforms,” the statement said.
*Reforms Must Continue*
The ministry clarified that the World Bank did not conclude that Nigeria’s fiscal system was collapsing or that reforms had failed.
Instead, it stated that the report indicates reforms are working but must be sustained and deepened to ensure that macroeconomic gains translate into inclusive economic growth.
“The Federal Government remains committed to strengthening fiscal transparency, improving revenue mobilisation, ensuring efficient public spending, and deepening reforms to support inclusive economic growth,” the statement noted.
The ministry also urged stakeholders and media organisations to ensure responsible reporting of fiscal issues.
“An accurate understanding and responsible reporting of fiscal information are critical to maintaining confidence in Nigeria’s reform trajectory and economic outlook.”
“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,” the statement concluded.