• Says FAAC deductions are lawful, not missing funds
• Highlights reforms, improved reserves, declining inflation
The Federal Government has firmly rejected claims of diversion or “hidden spending” of federation revenue, describing recent interpretations of the World Bank’s Nigeria Development Update as misleading and inaccurate.
In a statement issued on Sunday by the Federal Ministry of Finance, the government clarified that reports suggesting irregularities in the Federation Account Allocation Committee (FAAC) framework stem from a misreading of the World Bank’s findings, particularly the portrayal of FAAC deductions as “waste” or unaccounted funds.
The statement, signed by the Minister of State for Finance, Taiwo Oyedele, stressed that such deductions are legitimate and form part of Nigeria’s statutory fiscal structure.
According to the government, FAAC deductions cover clearly defined obligations, including 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 to subnational governments.
Oyedele explained that refunds and transfers to states and other tiers of government should not be misconstrued as leakages, noting that they represent lawful fiscal flows backed by statutory provisions and, in many cases, repayments of prior obligations.
He cautioned against what he described as the “selective use of outdated data” in public discourse, warning that such interpretations fail to reflect ongoing reforms acknowledged in the World Bank report.
The minister pointed to recent public financial management reforms, including a 2026 Executive Order designed to strengthen petroleum revenue remittances, which he said is already enhancing transparency and operational efficiency.
He added that the World Bank report itself projects that these reforms will improve fiscal transparency and boost revenues available for distribution to all tiers of government by about 0.4 per cent of Gross Domestic Product annually.
Providing a broader perspective, Oyedele noted that the overall assessment of Nigeria’s economic outlook in the report remains positive. He said economic growth is becoming more broad-based across sectors, while inflation, though still high, is gradually easing due to deliberate policy interventions.
He also cited improvements in the country’s external position, including stronger foreign reserves, a current account surplus, and a decline in the debt-to-GDP ratio—described as the first such reduction in over a decade.
The minister maintained that the World Bank report does not suggest a collapse of Nigeria’s fiscal system or a failure of reforms. Rather, he said, it underscores that ongoing reforms are yielding results and should be sustained and deepened to achieve inclusive growth.
Reaffirming the government’s commitment to fiscal discipline, Oyedele emphasised the need for accurate reporting and responsible engagement with economic data.
He urged stakeholders, particularly the media, to avoid narratives that could distort public understanding or erode confidence in the nation’s economic reforms.
