Law on the management of public finances: Release of recurrent funds: the FD unveils its strategy

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ISLAMABAD: The Finance Division issued a strategy for the release of recurrent funds for the financial year 2022-23 under the Public Finance Management Act and stated that for prudent fiscal discipline, these guidelines and instructions would be strictly followed by the Finance Division.

However, the strategy for PSDP, interest payments, domestic and external loan repayments and supplementary grants for the current fiscal year would be issued separately by the Finance Division.

According to the Finance Division, regular budget funds would be released by the Finance Division for approved requests for grants and credits within prescribed limits.

Funds for Employee Related Expenses (ERE) and payment of pensions at the 25 percent level would be released quarterly; (ii) expenditure excluding ERE 20% for quarter 1 and quarter 2 each, 25% for quarter 3 and 35% for quarter 4; (iii) the release of funds for rent of office and residential buildings, present value of pension, encashment of LPR and Prime Minister’s assistance programs will be made at 50% during each half of the fiscal year; (iv) grants would be released by the Finance Division on a case-by-case basis; (v) grants and loans at the level of 20% for quarter 1 and quarter 2 each, 25% for quarter 3 and 35% for quarter 4.

All Principal Accountants (PAO) and Heads of Departments, Autonomous Bodies, Accounting Organizations and Offices have been given a single budget with the responsibility of keeping funds available in all Account Managers, especially ERE; (ii) where an inadequate allocation has been made to ERE by the PAO in the current year budget, a necessary reallocation of the non-ERE budget will be made immediately as no additional funds for ERE will be provided during the financial year. year; (iii) there would be no expenditure overruns and no expenditures without budget allocations; (iv) the allocations under various ad hoc relief allowances merged into the basic salary scales from 01.07.2022 would be reallocated to the 2022 basic compensation and ad hoc relief allowance account manager no later than August 31, 2022 ; (v) the PAO or Head of Department would not reallocate funds allocated from the ERE to another (non-ERE) Account Manager except with the prior approval of the Finance Division through the expenditure wing.

Cases relating to international and domestic contractual and obligatory payments that exceed the limits prescribed above would be reviewed on a case-by-case basis by the Finance Division and would require the prior approval of the Finance Secretary; (ii) the release of funds for the rent of the office building, the residential building, the present value of the pension, the collection of the LPR and PM assistance packages will be made at 50% at during each semester of the current fiscal year.

With respect to grants, relevant PAOs will prepare quarterly fund requirement plans within the allocated budget and share them with relevant Finance Division wings prior to the start of each quarter; (ii) the Finance Division may examine the quarterly plan of grant needs and may transmit its opinions and comments to the OPA concerned within two weeks; (iii) while reaffirming its views and comments, the Finance Division will take into consideration the fiscal space as well as the availability of cash balances; (iv) release of funds by the PAO for grants will be made in accordance with the Funds Requirement Plans, as amended in light of comments from the Finance Division; (v) the sanction of the expenditure will be pronounced by the PAO concerned and [a] a copy will be sent to the Budget Wing, Finance Division.

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Instructions for applicable grants included; (i) The PAO or Head of Department will ensure that the annual budget of organizations/autonomous bodies/authorities/commissions/funds/boards established, managed and controlled by the Federal Government is approved by the Federal Government or other competent authority , in accordance with the respective statutes, rules and regulations; (ii) a certificate to the effect of this approval will be submitted to the Escadre du Budget, Finance Division.

Details of these approved budgets will also be shared with the Finance Division (expenditure wing) and the PAOs will ensure that these certificates along with the approved budgets reach the Finance Division by August 31, 2022 for FY23; (iii) Expenditure sanction for grants by the PAOs will be granted with the prior approval of the Expenditure Wing of the Finance Division; (iv) the allocation and disbursement of funds to authorities, institutions, bodies, associations, foundations and other public and private entities to be regulated and linked to the results and performance of the entities; (v) grants will be non-recurring and funds will only be disbursed to meet any justified shortfall for a limited period.

Budget funds for loans and advances and investments to provincial governments, public sector entities and others will be provided on the condition that all repayments due to the federal government on these accounts have been made in accordance with schedules/due dates. If all due repayments have not been made, at source, withholdings will be provided by the provincial finance and corporate finance branches.

Foreign Program Loans and Grants Adequate budget allocations for foreign exchange loans and grants under various programs will be made by all PAOs involved and forwarded to the Economic Affairs Division (EAD) and Finance Division.

Foreign Currency Payments Funds for foreign currency payments will require prior approval from the External Finance Wing of the Finance Division. When considering requests for such funds, the External Finance Wing will consider the availability of foreign currency. The Finance Department published guidelines on commitment control on March 4, 2022.

Annual and multi-year commitments for the purchase of goods, services and civil works by all PBOs and accounting organizations and offices will be recorded through the SAP system.

The will of the federal government to adopt austerity measures will be fully respected, all payments will be made through the pre-audit system through the appropriation account procedure or any other procedure issued by the Finance Division, no payment direct through the State Bank of Pakistan (SBP) will be done by any office except with the prior approval of the Finance Secretary in accordance with Cash Management and Treasury Single Account Rules 2020.

Copyright Business Recorder, 2022

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