IMF flags fiscal gap in Nigeria’s budgets

The International Monetary Fund has identified a significant fiscal gap in Nigeria's recent official budgets, revealing that approximately two percent of the Gross Domestic Product in public spending remains unrecorded. This omission obscures the true extent of the nation's financing requirements and the actual size of its fiscal deficit relative to its borrowing.

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So far we think that there are about two per cent of GDP of expenditure that were not reported that should be reported and should be recorded, so that this statistical discrepancy will disappear.

Christian Ebeke, the IMF Resident Representative in Nigeria, explained that critical capital allocations were entirely left out of formal budget documents and implementation reports. This practice, often linked to large-scale off-budget infrastructure projects, distorts assessments of Nigeria's fiscal stance and masks the real volume of public investment. Ebeke warned that this lack of comprehensive financial reporting hinders the Central Bank's ability to stabilize the economy by preventing policymakers from grasping the true fiscal trajectory.

"The lack of full reporting can also complicate coordination between fiscal and monetary policy, as policymakers may not have a clear picture of the true deficit," Ebeke stated, according to a Reuters report. He emphasized that bypassing the formal budget framework severely distorts objective assessments of Nigeria’s overarching fiscal stance.

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The lack of full reporting can also complicate coordination between fiscal and monetary policy, as policymakers may not have a clear picture of the true deficit.

In response, the Nigerian government has begun implementing corrective legislative measures to address the reporting gap. Authorities are working to repeal and revise current budget laws to formally include previously unrecorded expenditures. However, Ebeke cautioned that these legal adjustments must be supported by timely and updated implementation reports. The IMF stressed that eliminating these off-budget loopholes is crucial for restoring integrity to public procurement processes, ensuring proper oversight, and establishing genuine fiscal transparency.

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Improving transparency is critical.