Nigeria’s budget transparency under scrutiny as IMF cites missing 2% of GDP

The International Monetary Fund (IMF) has reported that Nigeria failed to record public spending equivalent to approximately 2% of its gross domestic product (GDP) in recent official budgets. This oversight has resulted in a significant discrepancy between the nation’s reported fiscal deficit and its actual financing requirements.

Christian Ebeke, the IMF’s resident representative in Nigeria, addressed these findings during a meeting with business executives in Lagos on Wednesday. He explained that because certain capital expenditures were excluded from both budget documents and implementation reports, the government’s fiscal deficit appears smaller than its true borrowing needs.

Implications for fiscal transparency

Ebeke noted that this unreported expenditure stems partly from large-scale government projects executed off-budget. This practice complicates the ability of observers to accurately assess the country’s fiscal position and public investment levels.

“So far, we think there is about 2% of GDP of expenditure that was not reported, which should be recorded so that this statistical discrepancy will disappear,” Ebeke stated. He added that incomplete fiscal reporting hinders coordination between fiscal and monetary authorities, as policymakers lack a comprehensive view of the government’s true financing requirements.

Government response and accountability

According to Ebeke, Nigerian authorities have begun to address these issues by repealing and revising recent budget laws to incorporate previously unrecorded expenditure. However, he stressed that updated budget implementation reports are still necessary to fully reflect these changes.

The IMF official emphasised that improving fiscal transparency is essential. He warned that off-budget spending raises significant concerns regarding procurement processes, accountability, and oversight.

Context of macroeconomic reforms

Ebeke’s comments follow the latest IMF Article IV consultation on Nigeria, which commended the federal government for its recent macroeconomic reforms. The fund acknowledged that these measures have strengthened economic stability and bolstered investor confidence.

However, the IMF warned that the benefits of these reforms have not yet translated into broad-based improvements in living standards. Furthermore, the fund cautioned that these gains remain vulnerable to external shocks, including the ongoing conflict in the Middle East.