The International Monetary Fund (IMF) has raised alarm over Nigeria’s chronic budgeting inaccuracies between 2011 and 2023, revealing widespread overestimations in both revenue and expenditure that have undermined the country’s fiscal credibility.
![](https://thenigerialawyer.com/wp-content/uploads/2025/05/idrinstitute.png")
![](https://thenigerialawyer.com/wp-content/uploads/2024/11/TheNigerialawyer-WhatsApp-Channel1.jpg")
In a new report titled “Fiscal Forecasting Errors in Nigeria,” the IMF exposes a persistent pattern of excessive optimism in budget projections, particularly around oil revenues and capital spending, calling into question the effectiveness of Nigeria’s national budget as a tool for sound economic policy.
The IMF found that Nigeria’s budget planners overestimated government revenues by an average of 1.8 percent of GDP annually, which translates to about 36 percent above actual collections. The primary driver of this overestimation was the government’s unrealistic oil production forecasts. Despite using conservative oil price benchmarks, Nigeria missed its oil production targets in 11 of the 13 years reviewed, due to persistent issues such as oil theft, pipeline vandalism, and technical constraints.
On average, errors in oil revenue forecasts alone amounted to 1.1 percent of GDP, which was 61 percent higher than actual oil receipts. Non-oil revenues such as Value Added Tax (VAT) and corporate income taxes fared better, but customs revenue forecasts were consistently inflated, reflecting administrative leakages and inefficiencies.
The report also highlights that unaccounted fuel subsidies, especially in 2021 and 2022, worsened fiscal forecasting accuracy. These subsidies were deducted from oil earnings but never properly recorded in budget documents, creating large implicit revenue gaps.
On the expenditure side, the IMF observed a recurring pattern of overestimated budgetary allocations, especially on capital projects. Between 2011 and 2023, total federal expenditure was over-projected by 0.8 percent of GDP annually, with the widest gaps appearing in recent years.
Capital expenditure execution was particularly weak, with actual disbursements coming in more than 70 percent lower than budgeted, pointing to what the IMF terms a “systematic optimism bias.”
Recurrent expenditures, however, were more accurately forecast, largely due to government efforts to restrain routine spending amidst dwindling revenues.
While fiscal deficit projections were somewhat close to actual outcomes, the IMF warns that this is misleading. The apparent accuracy was due to under-implementation of budgeted expenditures, not stronger revenue performance. This underperformance forced Nigeria to rely on massive Central Bank overdrafts—via “Ways and Means” financing—especially during 2017–2021, a move that has been linked to inflationary pressures and fiscal fragility.
To correct these structural flaws, the IMF recommends five urgent reforms:
- Strengthen forecasting capacity: Empower macro-fiscal units within the Ministry of Finance with tools, authority, and autonomy.
- Improve inter-agency coordination: Formalize data-sharing protocols between revenue agencies and budget offices.
- Invest in modern tools and training: Upgrade forecasting infrastructure and personnel capabilities.
- Publish regular forecast reviews: Introduce internal and external audits of forecasts to increase accountability.
- Enhance political commitment: Foster independent oversight—possibly via bodies like the Fiscal Responsibility Council—to insulate forecasting from political interference.
The IMF concludes that persistent forecasting errors pose serious threats to Nigeria’s macroeconomic stability, increasing debt vulnerabilities and weakening investor confidence. It stressed that accurate budget forecasts are essential to making sound fiscal decisions and delivering effective public services.
“Accurate budget forecasts ensure that the government makes budget choices that are consistent with its economic policy priorities and set MDAs up to deliver on these priorities,” the report states.
“History of Rivers State Judiciary: A Compendium of Personalities on the Bench.” Authored by Ampim Gogo Blankson, Esq., Deputy Director at the Rivers State Ministry of Justice, in collaboration with the Rivers State Judiciary 💰 Cover Price: ₦20,000.00 (Twenty Thousand Naira) Bukky Law Books, Rivers State High Court Complex, Moscow Road, Port Harcourt – 📞 08034868754📞 08034729738📞 Enquiries: ______________________________________________________________________ "Democracy Or Demoncrazy?", "Good Governance" And "Politics And Political Class": Order Prof. Ozekhome's Essential Trilogy Now 
📞 Enquiries: +234 704 044 9375 | +234 814 813 4773 | +234 816 872 3532 📧 Email: educodexl@gmail.com Follow the voice of wisdom. Read Prof. Mike Ozekhome. Be inspired. Be enlightened. Be empowered. ___________________________________________________________________ Grab Your Complete Law Reports Now!!! IP, Company, Evidence & Land Cases - All Volumes With Digital Index!!!
To get a copy kindly Call 07044444777, 07044444999, 08181999888, https://alexandernigeria.com/ ______________________________________________________________________
[A MUST HAVE] Evidence Act Demystified With Recent And Contemporary Cases And Materials
