Nigeria failed to record public spending equivalent to about 2 percent of gross domestic product (GDP) in recent official budgets, creating a gap between the country’s reported fiscal deficit and its actual financing needs, the International Monetary Fund (IMF) said on Wednesday.
Christian Ebeke, the IMF‘s resident representative in Nigeria, said the discrepancy means the government’s fiscal deficit appears smaller than the amount it has had to borrow because some capital expenditure was not reflected in budget documents or implementation reports.
Speaking to business executives in Lagos, Ebeke said the unreported spending was partly linked to major government projects undertaken outside the formal budget process, making it more difficult to accurately assess Nigeria’s fiscal position and levels of public investment.
“So far we think that there are about 2% of GDP of expenditure that were not reported that should be reported and should be recorded, so that this statistical discrepancy will disappear,” Ebeke said.
He noted that incomplete reporting also complicates coordination between fiscal and monetary authorities, as policymakers may not have a full picture of the government’s actual financing requirements.
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According to Ebeke, Nigerian authorities have started addressing the issue by repealing and revising recent budget legislation to incorporate previously unrecorded expenditures. However, he said updated budget implementation reports are still needed to fully reflect government spending.
He stressed that greater fiscal transparency is essential, warning that off-budget expenditure raises concerns over procurement practices, accountability and oversight.
The comments come after the International Monetary Fund, in its latest Article IV consultation on Nigeria, commended the government’s broad economic reforms, saying they had strengthened macroeconomic stability and improved investor confidence.
However, the IMF also cautioned that the gains from the reforms have yet to benefit millions of Nigerians and remain vulnerable to external risks, including global economic uncertainty and the impact of the conflict in the Middle East.
Analysts say improving budget transparency and ensuring all public expenditure is properly recorded will be important for strengthening fiscal credibility, enhancing investor confidence and supporting more effective economic policymaking.
