US Report On How Nigeria Failed Fiscal Transparency Test For Second Consecutive Year Rattles Investors

US Report On How Nigeria Failed Fiscal Transparency Test

 

 

OpenLife News reports that Nigeria has failed the United States of America government’s minimum fiscal transparency standards for the second year running, with the State Department saying the country made “no significant progress” in opening up its public finances in 2025.

In its 2026 Fiscal Transparency Report released Tuesday, the department assessed 139 governments and the Palestinian Authority.

Only 73 met the minimum requirements. Of the 67 that failed, 14 made progress. Nigeria was among 53 countries, including China, Saudi Arabia and Egypt, marked as making no progress.

The verdict comes amid growing complaints in Nigeria over poor budget implementation, with the federal government currently running three budgets simultaneously.

2024, 2025 and 2026 Budget Vague, Figures Don’t Add Up

The report delivered a harsh assessment of Nigeria’s budget process. It said budget documents “did not provide a substantially complete picture of the government’s revenues and expenditures” and failed to break down spending by ministry or executive office.

A credible budget, the report said, should detail income and spending by ministry, revenue by oil and non-oil sources, and allocations to state-owned enterprises. Nigeria fell short on all counts.

It also flagged a credibility gap: “actual revenues and expenditures did not reasonably correspond to those in the enacted budget.”

That marks a decline from 2025, when the U.S. said Nigeria’s budget was “generally reliable.”

While Nigeria published its enacted budget and end-of-year report online, it failed to publish the executive budget proposal at least one month before the fiscal year — a key U.S. requirement for public debate.

Audit Office Lacks Independence

The State Department also criticized the Office of the Auditor-General of the Federation, saying it does not meet international standards of independence and failed to publish substantive audit reports within 12 months.

“The supreme audit institution should meet international standards of independence, audit the executed budget, and verify the annual financial statements. The results… should be published within a reasonable period.”

“Without independence and published reports, citizens and lawmakers lack a critical tool for accountability,” the report said.

Procurement and Contracts Opaque

On procurement, the report said Nigeria did not publish accessible information on public contracts.

For natural resources, while award procedures exist in law, key details like location, duration and company names were not made public.

The 2026 report also added a new test: publishing terms of sovereign loans. Nigeria disclosed debt obligations but the U.S. did not assess if loan terms met the new standard.

The Few Positives Noted

The U.S. acknowledged areas where Nigeria met basic requirements:
– Published enacted budget and end-of-year report online
– Made information on debt obligations, including SOE debt, publicly available
– Sovereign wealth fund has a sound legal framework

But those were not enough to lift Nigeria above the minimum threshold.

Six Key Recommendations from Washington

The State Department urged Nigeria to:

1. Publish the executive budget proposal online in good time
2. Provide detailed breakdown of revenues and expenditures by ministry and source
3. Clearly state spending for executive offices
4. Ensure actual spending matches the approved budget with explanations for changes
5. Strengthen the independence of the Auditor-General’s office and publish audit reports
6. Make public procurement contract details easily accessible

Presidency: “Transparency Remains Our Priority”

Reacting, Special Adviser to the President on Media and Public Communication, Sunday Dare, said fiscal transparency remains a priority.

“The report is a specific assessment against the Department of State’s minimum fiscal-transparency requirements…

“It should not be interpreted as a comprehensive assessment of all fiscal reforms currently underway in Nigeria.”

He cited the Open Treasury initiative, public budget documentation, debt disclosures and procurement reforms as ongoing efforts.

Civil Society: Budget Implementation Unclear

BudgIT Country Director, Vahyala Kwaga, agreed with the US report.

“It’s easy to pronounce figures but it appears incredibly difficult for this administration to report on spending and earnings from a consolidated perspective.”

He also noted the President has yet to sign the Audit amendment bill and that procurement is “observed more in breach than implementation.”

PFIPC Probe Stalls Amid Forgery Allegations

Meanwhile, the House Ad hoc Committee investigating the alleged fake Presidential Foreign Investment Promotion Council failed to sit Tuesday as scheduled.

The panel is probing how an unrecognized body got N1.3 billion in the 2026 budget and allegedly used 29 forged documents from the State House, Finance Ministry and other MDAs.

The Accountant-General said a letter “purportedly from the State House” was used to process a budget code, but “that letter was never issued by the State House.”

Committee Chairman Yusuf Gagdi also described the appointment letter of alleged DG Adeniyi Adeyemi as “fake.”

Adeyemi has not appeared before the panel as he is reportedly in police custody.

Global Picture

Globally, 73 countries passed. Others that failed alongside Nigeria include Algeria, Angola, Uganda and Tanzania.

Only 14 countries made progress, including Senegal, Ethiopia, Liberia and Cameroon.

The congressionally-mandated report guides U.S. assistance and engagement. With Nigeria now failing two years in a row, pressure is mounting ahead of the 2027 budget cycle.

Investors Worry

Arising from this report, investors  are nervous over fiscal transparency failures, but cautiously optimistic. The worry is about fiscal credibility and debt. The optimism is about monetary stability and reforms.

The US State Department’s Aug 2026 report directly hits investor confidence because it means it’s hard to track how government money is spent.

BudgIT also noted “it’s incredibly difficult for this administration to report on spending”

Heavy Debt and Borrowing

-2026 debt service is budgeted at a massive N15.81tn

-Projected fiscal deficit: N12.14tn or 3.01% of GDP

-Public debt projected to rise to 34.68% of GDP by end-2026.

To that effect, analysts warn that  a rate cut “would diminish investor demand for government securities”, so government is stuck needing high yields to borrow.

Also, the CBN itself warned of “possible inflation surprises if fiscal spending rises sharply” and “sudden capital reversals”.

In like manner, analysts are of the view that election-related fiscal expansion  “deserves close monitoring,” much so CPPE has warned that structural weaknesses still restrict financing to productive sectors and that  tax reforms in 2026 are a “credibility test.”

Meantime, investors are watching if implementation matches the promises.