The Federal Government has clarified that refunds and transfers to states and other tiers of government are not leakages, noting that they represent legitimate fiscal flows, including repayments of obligations and statutorily backed allocations.
Minister of State for Finance, Mr. Taiwo Oyedele, made the clarification in a statement on Sunday while responding 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”.
He described as incorrect the reports characterising the Federation Account Allocation Committee (FAAC) deductions as “waste” or missing funds.
The Minister noted that 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 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,” he said.
Oyedela explained that some commentaries selectively relied on past data while ignoring the forward-looking analysis and ongoing public financial management reforms highlighted in the report.
According to him, the World Bank explicitly noted that reforms implemented in early 2026, including the recently signed Executive Order to safeguard remittance of petroleum revenues, are already addressing concerns around deductions, and are expected to improve transparency while increasing revenues available to all tiers of government by about 0.4% of GDP 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,” he added.
The Minister clarified that the broader message of the World Bank report was positive and forward-looking:
“Economic growth is becoming more broad-based across sectors.Inflation, while still elevated, is declining due to deliberate policy actions. Nigeria’s external position has strengthened significantly, with improved reserves and a current account surplus. Debt indicators have improved, including a decline in the debt-to-GDP ratio, the first in over a decade.
“These developments reflect the outcomes of the current administration’s ongoing macroeconomic policies and public financial management reforms,” he said.
Oyedele further clarified that the World Bank does not conclude that Nigeria’s fiscal system was collapsing or that reforms have failed. Rather, it stated that reforms are working, and they must be sustained and deepened to translate macroeconomic gains into inclusive growth.
He said the Federal Government remains committed to strengthening fiscal transparency, improving revenue mobilisation, ensuring efficient public spending, and deepening reforms to support inclusive economic growth.
Noting that an accurate understanding and responsible reporting of fiscal information are critical to maintaining confidence in Nigeria’s reform trajectory and economic outlook.
He urged 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.
