Strategy to ensure govt’s financial discipline

ISLAMABAD: Keeping its tight lid on public funds, the Ministry of Finance (MoF) on Tuesday issued a new strategy for the re-appropriation and allocation of additional funds during the current fiscal year to ensure financial discipline and remain within parameters committed to the international lenders.
The office memorandum conveyed to the ministries and divisions restricts all the principal accounting officers and heads of all public sector organisations, agencies and departments from re-appropriation of “unreleased budget” or seeking any supplementary grant except for natural disasters and also bars all from proposing even a technical supplementary grant unless the equivalent amount is surrendered from another head and that too within that ministry or organisation.
Reminding all about the requirements and powers under Article 84 and the Public Finance Management (PFM) Act of 2019, the order said the authorised officers, whether PAOs or heads of organisations, were allowed to re-appropriate funds already released and authorised by the MoF but “no re-appropriation shall be made from the unreleased budget.”
It said the PAOs had been provided additional funds to meet funding requirements of Adhoc Relief Allowance 2024, which was announced in the budget for the current fiscal year under a separate cost centre for each demand for grants and appropriations. However, the PAOs have now been directed to “re-appropriate these funds, in consultation with expenditure wing of the MoF only for Adhoc Relief Allowance 2024 in the third quarter of the current fiscal year”.
Even in this matter, in case of a shortfall in employee-related expenditures (ERE) allocation during the fiscal year, re-appropriation of funds from Non-ERE Heads of Accounts would be on a priority basis and re-appropriation orders duly approved by the competent authority shall be provided to the accounting organisations or offices for entry into SAP system. “However, released funds shall remain within the prescribed quarterly limits given by the MoF”.
The MoF said many cases for relaxation of the cut-off date for re-appropriation of funds, i.e. May 31, under the PFM Act 2019, were received in MoF during June every year. To tighten up, the MoF made it clear “that all such cases with prior approval of PAO shall only be considered by” MoF for adjustment of excess expenditure booked in accounts offices, to meet the shortfall in ERE head or unavoidable payments “which mature in June”.
In the case of Technical Supplementary Grants (TSGs), the MoF warned that any request for provision of funds through TSG should come from PAOs “with identification of resources under other heads along with certificate regarding equivalent surrender” of funds. In that case, the MOF’s expenditure wing would examine the TSG cases in detail and submit recommendations to the budget wing that would process the cases in light of the SAP system report and available fiscal space before submission to the finance secretary for approval.
The TSGs for development projects would come after meeting all above expenditures. “TSG cases relating to PSDP, after meeting the requirements mentioned above, shall be processed through the Planning, Development and Special Initiatives Division”, the MoF wrote.
The MoF put a complete bar on supplementary grants as required under the IMF dictates. “No Supplementary Grant for any additional unbudgeted spending over the parliamentary approved level shall be considered by Finance Division, except in cases of severe natural disasters”, the order said.
Published in Dawn, September 25th, 2024