The International Monetary Fund (IMF) has said Nigeria failed to capture public spending equivalent to about 2 per cent of Gross Domestic Product (GDP) in its recent national budgets, a gap that understates the country’s true fiscal deficit and borrowing requirements.
The disclosure was made on Wednesday by Christian Ebeke, IMF Resident Representative in Nigeria, during an engagement with business executives in Lagos.
According to the Fund, a significant portion of government expenditure—particularly capital projects—was executed outside the official budget framework, making Nigeria’s reported fiscal deficit appear lower than its actual financing needs.
Speaking at the event, Christian Ebeke said the IMF’s assessment found that some government expenditures were omitted from official budget documents and implementation reports.
“So far, we think that there are about two per cent of GDP in expenditure that was not reported but should be recorded so that this statistical discrepancy will disappear,” he said.
He explained that the discrepancy stems largely from major government projects executed outside the formal budget process, making it difficult to accurately assess Nigeria’s fiscal position and the true level of public investment.
According to him, incomplete reporting also complicates coordination between fiscal and monetary authorities because policymakers are working with an incomplete picture of the country’s budget deficit and financing requirements.
Ebeke noted that Nigerian authorities have begun addressing the issue by revising recent budget laws to incorporate previously unreported expenditures.
However, he said updated budget implementation reports are still required to provide a comprehensive picture of government spending.
He stressed that improving fiscal transparency is essential, warning that off-budget spending raises concerns about procurement practices, accountability and public financial management.
The IMF said comprehensive reporting of all public expenditure would eliminate the statistical gap between Nigeria’s reported fiscal deficit and its actual financing needs.
According to the Fund, better fiscal reporting would improve the credibility of Nigeria’s public finances, strengthen oversight of government spending and enhance coordination between fiscal and monetary authorities.
It added that transparent budget reporting is also critical for evaluating the effectiveness of public investment and ensuring greater accountability in the management of public resources.
The latest remarks come after the IMF, in its recent Article IV Consultation, commended Nigeria’s economic reforms, including the liberalisation of the foreign exchange market and the removal of fuel subsidies, saying the measures have improved macroeconomic stability and boosted investor confidence.
The Fund, however, cautioned that the benefits of the reforms have yet to translate into broad improvements in living standards and warned that the Nigerian economy remains vulnerable to external shocks, including geopolitical tensions and volatility in global commodity markets.
The IMF also recently advised caution over Nigeria’s proposed plan to raise up to $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank, noting that such transactions can be complex and may lack sufficient transparency.
