Unrecorded expenditure worth 2% of GDP distorts Nigeria’s true fiscal deficit and complicates economic policymaking, the Fund warns
The International Monetary Fund has revealed that Nigeria failed to record public expenditure worth approximately 2% of its Gross Domestic Product in recent official budgets, creating a gap between the country’s reported fiscal deficit and its actual borrowing requirements. The disclosure was made by the IMF Resident Representative in Nigeria, Christian Ebeke, during an engagement with business executives in Lagos on Wednesday.
Based on Nigeria’s nominal GDP of N441.5 trillion in 2025, the unrecorded spending amounts to roughly N8.83 trillion. Ebeke said the omission, largely linked to capital projects executed outside the formal budget process, makes the fiscal deficit appear smaller than the government’s true level of borrowing. “So far, we think that there is about 2% of GDP of expenditure that was not reported that should be reported and should be recorded, so that this statistical discrepancy will disappear,” he said.
The IMF official warned that the gap also weakens policy coordination, since both fiscal and monetary authorities may be operating without a complete picture of the government’s financing obligations. He stressed that off-budget spending raises serious concerns over procurement practices, institutional oversight, and public accountability, issues the Fund has flagged as prerequisites for restoring credibility to Nigeria’s public finances.
Ebeke confirmed that Nigerian authorities have begun addressing the discrepancy by revising recent budget legislation to accommodate previously unrecorded expenditure, though he noted that updated budget implementation reports are still required to fully close the gap. He emphasised that recording all public spending is critical to giving investors, policymakers, and citizens an accurate picture of the country’s fiscal position.
The remarks come shortly after the IMF published its latest Article IV consultation on Nigeria, which commended the federal government’s macroeconomic reforms, including foreign exchange liberalisation and fuel subsidy removal, for strengthening economic stability and improving investor confidence. However, the Fund cautioned that the gains have yet to translate into broad-based improvements in living standards, and that the country’s recovery remains vulnerable to external shocks, including geopolitical tensions and commodity price swings.
The IMF separately raised concerns about Nigeria’s plan to raise $5 billion through a derivatives-based financing arrangement with First Abu Dhabi Bank, warning that such transactions are often complex and lack transparency.
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