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The statement noted that some commentaries have relied on selective or outdated data, while ignoring recent improvements in public financial management.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