Govt tightens grip on expenditure

ISLAMABAD: The government on Wednesday notified fresh mechanism for release of funds for recurrent and development budget and the policy for allocation of supplementary grants (SG) for unseen or emergency expenditures during the fiscal year 2020-21.

The decision falls under the ambit of the Public Finance Management Act 2019 to streamline utilisation of federal consolidated funds in line with revenue flows. A notification issued by the Ministry of Finance said the government was averse, on general principles to admitting demands of SG. The federal cabinet especially the National Assembly and the Public Accounts Committee have directed to discourage SG unless they are extremely critical in nature.

The Principal Accounting Officer (PAO) of any ministry or division shall resort to finance an unforeseen emergency or insufficient appropriation by examining the approved allocated budget within the grant under detailed heads and meet the requirement through re-appropriation under delegated heads or refer the case to Expenditure Wing of the Finance Division for re-appropriation under restricted heads.

Therefore, if additional funds are required, the concerned division or department shall provide matching funds through surrender order for technical supplementary grant (TSG). All applications submitted by PAOs for regular SG or TSG shall be accompanied with a full explanation of the reason for funds on a proforma.

Notifies new mechanism for releasing development funds

In case, the SG or TSG is required for expenditure pertaining to the Public Sector Development Programme (PSDP), the recommendations of Planning, Development and Special Initiatives Division shall be required before submission of the case to the Finance Division.

All proposals for SG and TSG shall be routed through the Expenditure Wing of the Finance Division which shall review the position of the grant as a whole with reference to verified actuals as on that date and that of the previous year.

After due diligence and satisfaction, the Expenditure Wing shall forward the case to the Budget Wing with full justification and recommendations. The Budget Wing shall provide endorsement, duly signed by the finance secretary to the concerned division or department for submission of case to the Economic Coordination Committee of the Cabinet for approval.

Release of funds

Under the new rules, the funds for recurrent budget shall be released by the Finance Division for the approved demands for grants and appropriations for employees related and operational expenditure of the ministries, divisions and departments at the level of 25 per cent for first quarter, 30pc for second, 25pc for third and 20pc in fourth quarter.

On the other hand, funds for the development budget shall be released in a different manner i.e. 20pc of the allocation in the first quarter, followed by 30pc each in second and third and 20pc in the last quarter of the fiscal year.

The planning ministry would be required to devise project-wise and division-wise strategy to release funds for the PSDP within the appropriations approved by the National Assembly and included in the Schedule of Authorised Expenditure under Article 83 of the Constitution.

Fund releases for subsidies, grants, procurements and other allocations shall be based on actual verified claims, commitments and targets. Any relaxation to these limits shall be considered by the Finance Division on a case to case basis and shall require prior approval of the finance secretary.

All payments — both for recurrent and the PSDP projects — shall be made through the pre-audit system of the Accountant General Pakistan Revenues, Military Accountant General, other accounting offices or sub-offices, or through assignment account procedure. No direct payment through the State Bank of Pakistan shall be made, except with the prior approval of the finance secretary.

No authority shall incur or commit any expenditure from the Federal Consolidated Fund until sanctioned by the National Assembly and the expenditure had been provided for the fiscal year through schedule of authorised expenditure as required by Article 83 of the Constitution, for SG or TSG as per Article 84 of the Constitution and re-appropriation the Public Finance Management Act, 2019.

No expenditure in any head of account (i.e. employees or others) shall be incurred over and above the appropriations approved by the National Assembly and included in the Schedule of Authorized Expenditure or approved by the federal government through SG or TSG.

All PAOs would be required to keep adequate appropriation of funds in all the heads of accounts during the fiscal year 2020-21. All PAOs and the accounting offices shall ensure that in case of no budgetary allocation and no release of funds, there shall be no expenditure in any head of account.