The International Monetary Fund (IMF) says Nigeria failed to record public spending equivalent to about 2 percent of its gross domestic product (GDP) in recent official budgets, creating a gap between its reported fiscal deficit and actual financing needs.
Christian Ebeke, the IMF’s resident representative in
Nigeria, spoke on Wednesday at a meeting with business executives in Lagos.
Ebeke said the discrepancy means Nigeria’s fiscal deficit
appears smaller than the government’s actual borrowing needs because some
capital expenditure was excluded from budget documents and implementation
reports.
He said the unreported spending was linked, in part, to
large government projects executed off-budget, making it more difficult to
accurately assess the country’s fiscal position and public investment levels.
“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 added that incomplete fiscal reporting also complicates
coordination between fiscal and monetary authorities because policymakers may
not have a full picture of the government’s true financing requirements.
According to Ebeke, Nigerian authorities have started
addressing the issue by repealing and revising recent budget laws to
incorporate previously unrecorded expenditure.
However, he said updated budget implementation reports are
still required to fully reflect the changes.
The IMF official stressed that improving fiscal transparency
is essential, warning that off-budget spending raises concerns about
procurement processes, accountability and oversight.
Ebeke’s comments come after the IMF, in its latest Article
IV consultation on Nigeria, commended the federal government’s recent
macroeconomic reforms, saying they had strengthened economic stability and
improved investor confidence.
The fund, however, warned that the gains from the reforms
had yet to translate into broad-based improvements in living standards and
could be threatened by external shocks, including the conflict in the Middle
East.
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