Public Finance Management Act: Release of recurrent funds: FD unveils strategy

ISLAMABAD: The Finance Division has issued a strategy for the release of recurrent funds for the fiscal 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 with regard to the PSDP, interest payment, repayments of domestic and foreign loans and supplementary grants for the current fiscal year would be issued by the Finance Division separately.

According to the Finance Division, the funds for the recurrent budget would be released by the Finance Division for the approved demands for grants and appropriations as per limits prescribed.

The funds for employees’ related expenses (ERE) and pensions payment at the level of 25 per cent would be released for each quarter; (ii) non-ERE expenditure 20 per cent for quarter 1 and quarter 2 each, 25 per cent for quarter 3 and 35 per cent for quarter 4; (iii) release of funds in respect of rent of Office and residential buildings, commuted value of pension, encashment of LPR and Prime Minister’s assistance packages will be made 50 per cent during each half of fiscal year; (iv) subsidies would be released by Finance Division on case to case basis; (v) grants and lending at the level of 20% for quarter 1 and quarter 2 each, 25 per cent for Quarter 3 and 35 per cent for Quarter 4.

All the Principal Accounting Officers (PAOs) and head of departments, autonomous bodies, accounting organizations and offices were provided one-line budget with the responsibility to keep available funds in all heads of accounts especially ERE; (ii) where inadequate allocation has been made in ERE by the PAO in the budget for current fiscal year, necessary re-appropriation from non-ERE budget will be made forthwith as no additional funds for ERE would be provided during the course of the financial year; (iii) there would be no excess expenditure and no spending without budgetary allocations; (iv) allocations under various ad hoc relief allowances merged into basic pay scales from 01.07.2022 would be re-appropriated to the head of account basic pay and ad hoc relief allowance 2022 not later than 31st August 2022; (v) the PAO or Head of Department would not make any re-appropriation of allocated funds from the ERE to any other head of account (non-ERE) except with the prior concurrence of Finance Division through expenditure Wing.

The cases relating to international and domestic contractual and obligatory payments, which are beyond the above-prescribed limits would be considered on case to case basis by Finance Division and it would require prior approval of the finance secretary; (ii) release of funds in respect of rent of office building, residential building, commuted value of pension, encashment of LPR and PM Assistance Packages will be made 50 per cent during each half of current fiscal year.

With regard to subsides, the PAOs concerned will prepare quarterly funds requirement plans within allocated budget and share with relevant Wings of Finance Division before start of each quarter; (ii) the Finance Division may review the quarterly requirement plan for subsidies and may convey its views and comments to the PAO concerned within two weeks; (iii) while firming up its views and comments Finance Division will consider, fiscal space as well as cash balances availability; (iv) release of funds by the PAO for subsidies will be made in accordance with the funds requirement plans, as modified in light of Finance Division’s comments; (v)the sanction for expenditure will be issued by the PAO concerned and [a] copy will be sent to Budget Wing, Finance Division.

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The instructions for grants applicable included; (i) the PAO or Head of Department will ensure that the annual budget of the organizations/autonomous bodies/authorities/commis-sions/funds/boards which are established, managed and controlled by the federal government will be approved by the federal government or any other competent Authority as required under the respective Statute, rules and Regulations; (ii) a certificate to the effect of such approval will be submitted to Budget Wing, Finance Division.

The details of such approved budgets will also be shared with the Finance Division (Expenditure Wing) and PAOs will ensure that such certificates as well as approved budgets reach Finance Division by 31st August 2022 in respect of fiscal year 23;(iii) sanction of expenditure for grants by the PAOs will be made with prior concurrence of the expenditure Wing of the Finance Division; (iv) the allocation and disbursement of funds to the public and private authorities, institutions, bodies, associations, foundations and other required to be regulated and linked to the output and performance of the entities; (v) grants-in-aid will be non-recurring and funds will be disbursed only to meet any justified shortfall for a limited period of time.

Budgetary funds on account of loans and advances and investments to provincial governments, public sector entities and others will be provided with the condition that all due re-payments to the federal government on these accounts have been made as per schedules/maturities. If all due re-payment have not been made, at source, deductions will be ensured by provincial finance and corporate finance wings.

Foreign Program loans and grants adequate budgetary allocations on account of foreign exchange component loans and grants under different programs will be ensured by all relevant PAOs, and conveyed to Economic Affairs Division (EAD) and Finance Division.

Foreign Exchange Payments Funds for foreign exchange payments will require prior approval by the External Finance Wing of the Finance Division. While examining requests for such funds, External Finance Wing will consider availability of foreign exchange. Finance Division has issued commitment control guidelines on 4th March 2022.

Annual and multi-annual commitments for procurement of goods, services and civil works by all PAOs and accounting organizations and offices will be recorded through the SAP System.

Federal government’s drive for adoption of austerity measures will be fully adhered, all payments will be made through the pre-audit system through Assignment Account Procedure or any other procedure issued by the Finance Division, no direct payment through the State Bank of Pakistan (SBP) will be made by any office, except with the prior approval of the finance secretary as per cash management and Treasury Single Account Rules 2020.

Copyright Business Recorder, 2022