Lagos, July 1 - Nigeria appears to have about 2% of GDP in public spending that has not been recorded in recent official budgets, creating a divergence between the publicly reported deficit and the country’s true financing needs, IMF resident representative in Nigeria Christian Ebeke said on Wednesday.
Ebeke said the gap stems in part from capital expenditures that were not included in budget documents or in implementation reports, leaving the fiscal deficit looking smaller on paper than the actual level of borrowing. These unrecorded outlays are associated with large government projects that were carried out off-budget, he told business executives in Lagos.
"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 warned that the incomplete reporting makes it harder for policymakers to get a clear view of the government's fiscal position. That opacity can complicate coordination between fiscal policy and monetary policy because fiscal authorities, central bankers and market participants may be operating from different estimates of the deficit and borrowing needs.
Ebeke added that Nigerian authorities have started to tackle the problem by repealing and revising recent budget laws to bring previously unrecorded spending into the formal accounts. However, he said that updated implementation reports are still needed to reflect those changes fully.
Improving transparency remains key, Ebeke said, noting that off-budget spending raises concerns about procurement processes and oversight. Greater clarity in reporting would address the statistical discrepancy and reduce uncertainty about how much the state is investing and borrowing.
In its latest Article IV review, the IMF commended Nigeria’s wide-ranging reforms for strengthening economic stability and bolstering investor confidence, but it warned that the improvements had not yet delivered benefits to millions of citizens and could be vulnerable to global shocks, including the conflict in the Middle East.
Context and next steps: Authorities are taking legislative steps to fold off-budget spending into the formal accounts, but full transparency depends on revised implementation reports being published so that the previously hidden expenditures are visible to policymakers and markets.