The Federal Government has stated that deductions from federation earnings by the Federation Account Allocation Committee (FAAC) are being misrepresented as revenue diversion.
In a statement signed by Taiwo Oyedele, the Ministry of Finance said some media reports have misinterpreted findings from the World Bank’s Nigeria Development Update (NDU).
According to the ministry, the deductions highlighted in the report are not diversions or hidden spending, but include statutory transfers, savings and investments, security-related expenditures, and other legitimate fiscal obligations.
“The attention of the Federal Ministry of Finance has been 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 said.
It added that such interpretations reflect a misunderstanding of Nigeria’s fiscal structure.
The ministry explained that FAAC deductions cover statutory transfers, cost-of-collection charges, refunds to Ministries, Departments and Agencies (MDAs), and interventions benefiting subnational governments.
It emphasized that refunds and transfers to states and other tiers of government are not leakages, but legitimate fiscal flows backed by law.
The government also questioned why some commentaries ignored the World Bank’s positive assessment of ongoing economic reforms.
According to the ministry, the report noted that recent reforms would improve transparency and increase revenue.
It stated that measures introduced in early 2026, including an executive order to safeguard petroleum revenue remittances, are expected to boost transparency and raise revenues available to all tiers of government by about 0.4% of GDP annually.
The ministry added that selective interpretation of the report, without acknowledging ongoing reforms, presents a distorted picture of the country’s fiscal situation.
It further highlighted that the World Bank report pointed to broader economic improvements, including more diversified growth across sectors, declining inflation, improved foreign reserves, and a current account surplus.
Debt indicators have also improved, with a decline in the debt-to-GDP ratio for the first time in over a decade.
The ministry stressed that the report does not suggest Nigeria’s fiscal system is failing, but rather that reforms are beginning to yield results and should be sustained.
It reiterated the Federal Government’s commitment to strengthening fiscal transparency, improving revenue mobilisation, and ensuring efficient public spending to support inclusive economic growth.
The ministry also urged stakeholders and the media to report fiscal matters responsibly to avoid misinterpretations that could undermine public confidence in ongoing reforms
