The U.S. Department of State said Nigeria has failed to meet the minimal fiscal transparency requirements for the second year running despite the country’s efforts, stating that the country made no meaningful progress in strengthening its financial management and opening up its public finances in 2025. History
Vanguard reports the department reviewed 139 nations including the Palestinian Authority, finding only 73 met baseline standards.
Of the 67 that did not, 14 achieved significant progress, while 53, including Nigeria, were noted as making no development.
The news came as Nigerians lamented poor implementation of the nation’s budget, especially at a time the current administration is operating three budgets – 2024, 2025 and 2026- simultaneously.
The assessment was based on information received from the U.S. Embassy in Abuja, other federal agencies, foreign organisations and civil society groups from January 1 to December 31, 2025, the State Department said.
In a rapid reaction last nite, the presidency stated transparency, accountability and competent public financial management were important priorities of the federal administration.
Figures do not add up, budget ambiguous
But the US report issued a harsh assessment on Nigeria’s budget process, stating the national budget remained imprecise on both government revenue and expenditure.
It explicitly accused the federal government, among other things, of not providing a complete picture of its revenue and expenditures in the review period.
“The budget documents did not provide a significantly complete picture of the government’s revenues and expenditures, or disaggregate expenditures to support executive offices in the budget,” the audit said.
The paper says a largely full budget should indicate income and spending by ministry, break down revenue by source and kind (oil and non-oil) and reveal allocations to state-owned firms and special accounts.
Nigeria’s paperwork did not meet that threshold, the investigation found. History
The department also cited a credibility gap in budget execution, saying “actual revenues and expenditures did not reasonably conform to the enacted budget.”
It was a big step down for Nigeria from 2025, when the U.S claimed Nigeria’s “budget documents provided a substantially complete picture of the government’s planned expenditures and revenue and were generally reliable.”
The report also stated that although Nigeria released its enacted budget and end-of-year report online, the government “did not publish its executive budget proposal within a reasonable period.
The U.S. standards stipulate that the executive plan shall be published at least one month before the start of the fiscal year and before legislative approval to allow for substantial public debate.
Audit office is not independent
The report also targeted Nigeria’s oversight institutions, pointing out that the country’s ultimate audit institution, the Office of the Auditor-General of the Federal, OAuGF, did not fulfil international norms of independence and did not issue substantial reports. Historical
The audit office is expected to check how public money was spent and publish results within 12 months of the end-of-year report. It was noticed that the audit office had access to the whole executed budget but failed to publish it.
“The supreme audit institution should be independent in accordance with international standards, audit the implemented budget and verify the annual financial statements. …the results of such audits… should be disseminated in a timely manner,” the study said.
It said that without independence and published findings, citizens and lawmakers lacked a key tool for accountability.
Public purchases, contract details kept from the public
The U.S. study claimed that on procurement and natural resources, Nigeria’s processes remained opaque, with the government failing to provide accessible information on public procurement contracts. Historie
The study said that in the case of natural resource extraction, Nigeria “specified by law the criteria and procedures for the award of contracts and licenses, and complied with existing regulations in practice.”
But it said the main parameters of concessions such as geographic region, resource, length and business awarded were not made public after judgements were decided.
The 2026 report also proposed a more rigorous requirement: countries must now publish the terms and conditions of sovereign loans, including liabilities and collateralised assets.
Nigeria had provided information on debt commitments, particularly large state-owned firm debt, in the public domain, but the department did not evaluate whether loan terms satisfied the new criteria.
Fiscal transparency was not just a bureaucratic exercise, but an important part of good public financial management, which enabled citizens to see how their tax revenues were being spent, fostered market confidence, lowered the risk of corruption and helped create competitive conditions for businesses, the State Department said.
Transparency is a window that allows citizens to look into government budgets and the citizens are the ones who hold governments accountable. That gives a basis for confidence and growth in the market,” the report said.
The report however acknowledged that failing the test did not necessarily mean that there was a lot of corruption, but it also warned that a lack of openness could be an enabler for corruption, unfair practices, financial crimes, and predatory lending and activities.
The report also helped assure appropriate use of U.S. taxpayer support and promote business enabling conditions for U.S. enterprises abroad, which is important to U.S. policymakers.
The few positives noted
Even with the wide-ranging critiques, the State Department said there were instances in which Nigeria met fundamental requirements. History:
The Department said the government made its enacted budget and end-of-year report widely and easily available to the public, including online, meeting the U.S. test for public availability for those two documents.
Secondly, it observed that Nigeria provided “public information on debt obligations, including major debt of state-owned enterprises”.
The audit also said the country’s sovereign wealth fund had a good legal structure and disclosed its funding source and general approach to withdrawals.
However, the research said they are not enough to bring Nigeria above the minimum level.
The U.S State Department urged Nigeria to improve fiscal transparency by taking six steps including publishing the executive budget proposal online in good time, providing detailed and complete breakdown of revenues and expenditures by ministry and source and clearly stating spending for executive offices. Historical
Washington also urged Abuja to guarantee that actual expenditure is aligned with the authorised budget with explanations for any large adjustments; reinforce the independence of the Auditor-General’s office, disclose its audit reports and make public procurement contract details readily available.
Worldview
The U.S. said globally 73 governments satisfied basic standards but 67, including significant economies like China, Egypt, Saudi Arabia, Pakistan and Ukraine, did not.
Of the 67, just 14 demonstrated meaningful development over the review period. Bangladesh, Cameroon, Central African Republic, Chad, Dominican Republic, Ecuador, Ethiopia, Laos, Lebanon, Liberia, Libya, Niger, Sao Tome & Principe and Senegal were named as being on course.
Nigeria was among countries making no substantial improvement, out of 53 countries including Algeria, Angola, Uganda and Tanzania, The Gambia, Guinea, Guinea-Bissau, Mali, Sierra Leone and Togo. History.
The U.S decision on Nigeria’s fiscal openness comes as there is a heated debate over specific line items in the 2026 budget such as expenditures for religious facilities, distinct budgetary provisions for construction and refurbishment of mosques and churches.
Other flagged items included billions of naira for constituency projects spread across ministries with no direct mandate for such projects, duplicated road and school projects showing up in different agencies and lump-sum allocations such as “special presidential interventions” and “miscellaneous” in the hundreds of billions with no breakdown.
The Fiscal Transparency Report, mandated by Congress and released annually, is used by Washington to guide engagement with partner countries and assess eligibility for some forms of U.S assistance.
The study arrives in the lead up to Nigeria’s 2027 budget cycle, laying renewed pressure on the federal government to remedy transparency deficiencies that have now left the country below U.S. requirements for two consecutive years.
“Fiscal transparency, accountability remain our priority – Presidency
Reacting to the report, Special Adviser to the President on Media and Public Communication, Sunday Dare, said Nigeria would continue to undertake reforms to strengthen the management, reporting and disclosure of public resources. Historical
“We note the report of the U.S. Department of State on fiscal transparency,” he stated. Fiscal transparency, accountability and effective public financial management are key priorities of the Federal Government and Nigeria continues to implement reforms to strengthen the management, reporting and disclosure of public resources.
However, it is crucial to contextualise the findings properly. The U.S. Fiscal Transparency Report is a targeted assessment of whether the Department of State’s minimal standards for fiscal transparency are met, including whether national budget data, government contracts and natural-resource licenses are publicly available.
It is not therefore to be seen as a complete review of all fiscal and public financial management reforms that are taking place in Nigeria.
Certainly the study itself acknowledges progress by Nigeria in the public availability of budget documents and debt commitments. The concerns found, particularly in procurement transparency, budget-execution reporting and audit processes, are issues that the government is taking seriously and for which the ongoing institutional reforms are meant to further enhance.
“Nigeria has established several mechanisms to promote fiscal transparency, including the Open Treasury initiative, public budget documentation, debt disclosures and public procurement reforms. The government is also upgrading digital procurement and other technologies to increase the accessibility, reliability and timeliness of public financial information.
So the correct reaction is not to disregard the findings or to offer them as a complete definition of Nigeria’s fiscal governance. Instead, the report provides an external baseline to further consolidate previous improvements. The story
“The federal government is committed to improving the quality and timeliness of fiscal reporting, strengthening audit institutions, expanding access to procurement information and ensuring that citizens, investors and other stakeholders have greater visibility into the management and utilisation of public resources.
“The end goal is the same: a more transparent, accountable and credible fiscal system that strengthens public confidence, promotes investment and ensures that public resources are used effectively and in the national interest.”
BudgIT: Budget implementation is ambiguous, unclear
“The report by the US is correct, the budgets of the federal government, especially the capital part, are often vague,” the Country Director of BudgIT, Mr Vahyala Kwaga, said in reaction.
He said, “The Nigerian federal budget has always been clear in terms of the composition of its revenue and expenditure. The report on budget implementation has not been clear for almost one financial year.
“Easy to quote figures but it looks incredibly difficult for this administration to report on spending and earnings from a consolidated perspective. The International Public Sector Accounting Standards, IPSAS, are supposed to have been accepted by Nigeria and this is all the more outrageous.
“The second point is correct, the Office of the Auditor General of the Federation is not independent. His office has no direct control over the scope of his investigatory jurisdiction or his staff.
The necessity for change in the audit regime has been accepted, but the President seems reluctant to sign the Audit modification law, which has been on his desk for months. Clearly, this government is not prepared to move Nigeria from an audit statute of 1956. History.
“The budget is vague in that some elements of capital expenditure have been placed in the nebulous ‘capital supplementation’ and the 2024 and 2025 repeal and re-enactment bills (now laws) have effectively smuggled in projects that did not undergo the normal legislative scrutiny.
Terms of the contract have not been released in general. The line items within the capital expenditure component of the budget often reflect where the government is concerned programmatically, whereas the process of procurement, which supposed to be managed by the existent 2007 law-is noticed more in breach than implementation.
“The procurement journal is not publicised for example, tenders may be announced but information on the bid opening event will not be announced and evidence of competitive bidding processes is absent.
“Debt information has been available but the required debt sustainability analyses have not been published since 2023.
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