Nigeria has public expenditure equivalent to about 2 percent of its gross domestic product that was not recorded in recent official budgets, creating a gap between the country’s reported fiscal deficit and its actual financing needs, an International Monetary Fund (IMF) official said on Wednesday.
Christian Ebeke, the IMF’s resident representative in Nigeria, said the unreported spending means the government’s budget deficit appears smaller than the amount it actually needs to borrow because some capital expenditures were omitted from budget documents and implementation reports.
Speaking to business executives in Lagos, Ebeke said the unrecorded expenditure was linked in part to major government projects financed outside the formal budget process, making it more difficult to accurately assess Nigeria’s fiscal position and 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,” he said.
According to Ebeke, incomplete reporting also complicates coordination between fiscal and monetary authorities because policymakers do not have a full picture of the government’s actual deficit and financing requirements.
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He said Nigerian authorities had begun addressing the problem by repealing and revising recent budget laws to incorporate previously omitted spending, although updated budget implementation reports were still required to fully reflect the changes.
Ebeke stressed that improving fiscal transparency would be essential to strengthening public financial management, adding that off-budget expenditure raises concerns over procurement practices, accountability and oversight.
Greater transparency, he said, would provide a clearer assessment of government finances, improve policy coordination and enhance investor confidence.
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Nigeria has embarked on a series of economic reforms aimed at restoring macroeconomic stability, including the removal of fuel subsidies, exchange rate reforms and efforts to improve domestic revenue mobilisation.
In its latest Article IV consultation, the IMF said the reforms had helped strengthen economic stability and boost investor confidence, while cautioning that their benefits had yet to reach many Nigerians.
The Fund also warned that Nigeria remains vulnerable to external risks, including global economic uncertainty and geopolitical tensions such as the conflict in the Middle East, which could affect commodity prices, inflation and government finances.
Analysts say fully incorporating all public expenditure into official budget documents would improve the credibility of Nigeria’s fiscal statistics and provide investors, development partners and policymakers with a more accurate picture of the country’s public finances.
They add that enhanced budget transparency could also strengthen accountability and support more effective economic planning as Africa’s largest economy continues efforts to consolidate its public finances.
