The Federal Government has dismissed reports alleging the diversion of Federation Account revenues.

It insisted that deductions from the Federation Account Allocation Committee (FAAC) are lawful and do not constitute illegal or hidden spending.

In a statement yesterday, Minister of State for Finance, Taiwo Oyedele, said claims that a significant portion of federation earnings is being siphoned off stem from a misinterpretation of recent analysis by the World Bank.

Oyedele stressed that deductions referenced in public discourse represent legitimate fiscal obligations, not leakages, as widely portrayed.

“These interpretations misrepresent the World Bank’s analysis and reflect a misunderstanding of the fiscal system,” he said.

The minister added that categorising FAAC deductions as “waste” or missing funds is factually incorrect.

According to Oyedele, the figures cited in the World Bank report cover a range of lawful fiscal activities, including statutory transfers, savings, investments and security-related expenditures.

He explained that the amounts also include cost-of-collection charges, refunds to ministries, departments, and agencies (MDAs), as well as targeted interventions designed to support sub-national governments.

The government emphasised that refunds and transfers to states and other tiers of government are not illegal deductions but legitimate repayments and allocations backed by existing laws and fiscal frameworks.

The statement noted that some commentaries have relied on selective or outdated data, while ignoring recent improvements in public financial management.

Among these is a newly signed Executive Order aimed at strengthening the remittance of petroleum revenues, which is projected to boost distributable income for all tiers of government by about 0.4 per cent of Gross Domestic Product (GDP) annually.

“The World Bank explicitly notes that reforms implemented in early 2026 are already addressing concerns around deductions and are expected to improve transparency,” the statement said.

The minister warned that focusing on isolated aspects of the report without recognising these corrective measures presents a distorted picture of the country’s fiscal position.

He maintained that the broader message of the World Bank report is positive, pointing to signs that economic growth is becoming more broad-based across sectors.

The statement added that inflation, although still elevated, is gradually easing as a result of deliberate policy actions, while Nigeria’s external position has strengthened, with improved reserves and a current account surplus.

It further noted that the country has recorded a decline in its debt-to-GDP ratio for the first time in over a decade, attributing the development to ongoing macroeconomic reforms.

“The World Bank does not conclude that Nigeria’s fiscal system is collapsing or that reforms have failed.

“Rather, it states that reforms are working and must be sustained and deepened to translate macroeconomic gains into inclusive growth,” Oyedele said.

Reiterating its position, the Federal Government urged the media and stakeholders to interpret fiscal data accurately and responsibly to avoid undermining public confidence.

It affirmed its commitment to enhancing revenue mobilisation and ensuring efficient public spending, while cautioning that misleading narratives could erode trust and create unnecessary tension.

“An accurate understanding and responsible reporting of fiscal information are critical to maintaining confidence in Nigeria’s reform trajectory,” the statement added. (The Nation)

Update news