The International Monetary Fund (IMF) has estimated that Nigeria failed to record public expenditure equivalent to about two per cent of its Gross Domestic Product (GDP) in recent official budgets, a gap that understates the country’s fiscal deficit and masks its actual borrowing requirements.
The IMF’s Resident Representative in Nigeria, Christian Ebeke, disclosed this on Wednesday while addressing business executives in Lagos, saying the omission has created a statistical discrepancy between Nigeria’s reported fiscal deficit and the level of financing required to fund government activities.
According to Ebeke, the discrepancy stems largely from capital expenditure undertaken outside the formal budget framework. As a result, official budget documents and implementation reports do not fully reflect the government’s spending, making it more difficult to assess Nigeria’s true fiscal position and the scale of public investment.
“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,” he said.
The IMF official noted that incomplete fiscal reporting could weaken macroeconomic policy coordination by limiting the ability of fiscal and monetary authorities to work from a common assessment of the government’s financing needs.
Analysts say accurate fiscal reporting is critical for assessing debt sustainability, improving budget transparency and strengthening investor confidence, particularly as Nigeria continues implementing economic reforms aimed at restoring macroeconomic stability and attracting capital inflows.
Ebeke said the Nigerian authorities have begun addressing the issue through revisions to recent budget legislation to incorporate previously unreported expenditure. However, he stressed that updated budget implementation reports would be required to eliminate the discrepancy and provide a more accurate picture of government finances.
The IMF’s observations come as Nigeria pursues fiscal consolidation alongside broader economic reforms, including tax administration measures, subsidy reforms and efforts to improve public revenue mobilisation. The government has also sought to strengthen confidence in the economy through greater exchange rate flexibility and tighter fiscal management.
For investors, the IMF’s findings underscore the importance of transparent fiscal reporting in evaluating Nigeria’s sovereign credit profile and public debt dynamics. A persistent gap between reported budget deficits and actual financing needs could complicate assessments of the country’s fiscal health and influence perceptions of sovereign risk.
The Fund’s call for more comprehensive reporting is expected to reinforce ongoing efforts to improve public financial management and align Nigeria’s fiscal statistics with international reporting standards, providing policymakers and investors with a clearer view of the country’s underlying fiscal position.