The International Monetary Fund has urged finance ministers and policymakers across Sub-Saharan Africa to urgently reform their budgeting systems, warning that persistent gaps between approved budgets and actual fiscal outcomes are damaging economic stability, increasing borrowing costs, and weakening investor confidence.

In its latest report titled “Budget Credibility in Sub-Saharan Africa,” prepared by a team led by Pablo Lopez Murphy alongside Can Sever, Félix F. Simione, and Qianqian Zhang, the IMF identified deep structural weaknesses affecting fiscal planning and implementation across many African countries.

According to the report, governments across the region frequently record major discrepancies between projected revenues, planned spending, and actual fiscal outcomes, with deficits often exceeding official targets.

The Fund explained that many countries consistently overestimate revenues, while recurrent expenditures such as wages, transfers, and operational costs surpass approved limits. Meanwhile, capital projects are often delayed or underfunded as governments redirect resources to meet immediate spending pressures.

The IMF warned that these fiscal patterns reflect weak spending controls and encourage procyclical spending, particularly during election periods.

For Nigeria, the IMF said weak budget credibility continues to threaten macroeconomic stability, increase sovereign risk premiums, and weaken public confidence in governance.

The report recommended six key reforms, including:

·       stronger macro-fiscal frameworks,

·       realistic revenue assumptions,

·       stricter expenditure controls,

·       improved project appraisal systems,

·       credible fiscal rules with independent oversight,

·       and stronger donor coordination through national systems.

Commenting on Nigeria’s fiscal management, public finance expert Oluseun Onigbinde said the country’s budgeting process increasingly reflects fiscal indiscipline.

He criticised the practice of inserting projects that do not align with national priorities into budgets and later rolling unfinished projects into subsequent fiscal years despite revenue shortfalls.

Available fiscal figures show that the Federal Government generated ₦20.98 trillion in revenue in 2024 against total expenditure of ₦34.49 trillion, resulting in a ₦13.58 trillion deficit financed mainly through borrowing.

The report also noted that portions of the 2024 budget were rolled into 2025 rather than being fully closed out, while the proposed 2026 budget projects expenditure of ₦58.47 trillion against expected revenue below ₦28 trillion, leaving an anticipated deficit of about ₦23.85 trillion.

According to the projections, debt servicing alone could consume ₦15.9 trillion, while capital expenditure is estimated at ₦13.34 trillion.

The IMF stressed that without stronger revenue generation, improved spending discipline, and greater transparency, Nigeria risks remaining trapped in a cycle of rising debt, weak fiscal performance, and declining investor confidence.