ISLAMABAD: The Ministry of Finance has requested that all ministries, divisions, departments, and self-governing institutions turn over any monies that they believe cannot be used within the current fiscal year, which ends on June 30, 2024, by May 15 in order to facilitate the finalization of the federal budget for 2024–25.
All entities created or run with public funds are required by the Public Finance Management Act (PFMA) of 2019 to turn over their excess funds by May 31 in order to close the fiscal year’s books. The approval and distribution of monies for the upcoming fiscal year are predicated on this money surrender.
But according to the federal government’s Accounting Policies and Procedures Manual (APPM), any unused money or money that is expected to remain unused must be turned in by May 15 of each year at the latest. In order to provide more clarity, the finance secretary has directed all counterparts in other ministries to follow the APPM.
Because of this, the deadline for turning in unused funds has been moved ahead to May 15 in anticipation of the International Monetary Fund (IMF) negotiations over the 24th bailout program. Based on actual spending in the current year, the allocations for both development and non-development expenditures for the upcoming fiscal year will be determined.
The deadline for turning in unused funds is shifted as a result of IMF talks
For entrance into the central budget software system, SAP, the finance ministry has issued an order to all primary accounting officers, requesting them to “ensure that all surrender orders are issued and communicated to” the director of budget computerization by May 15 at the latest. As required by Section 12 of the PFMA, the order is applicable to all ministries, divisions, their affiliated departments and lower offices, and autonomous organizations.
Amounts contained in the first approved budget must be returned to the Ministry of Finance, which is in charge of federal funds, in accordance with the financial regulations and the PFMA 2019 “because they have not or will not be spent in the financial year by the entity.”
All ministries, divisions, their attached departments, subordinate offices, and autonomous organizations are required to turn over all anticipated savings in the grants or assignment accounts, or grant-in-aid controlled by them, to the Finance Division [by the thirty-first day of May each year], according to Section 12 of the PFMA 2019.
The Finance Division may choose to extend the deadline before the end of the fiscal year in an extraordinary situation if necessary. According to the provision, the Finance Division must also notify the parties involved in the surrenders that they have accepted them before the end of the fiscal year. If necessary, they must also include a corresponding amount in the budget for the following fiscal year.
Any spending entity mandated by the APPM to perform tasks or incur expenses on behalf of another must properly manage its budget with respect to the money granted by the primary authority.
It is incumbent upon the entity making the expenditure to guarantee that the amount of money supplied by the principle entity is not surpassed, that the money is utilized for the intended purpose, and that any savings that are anticipated are immediately returned to the principal company. The principal entity must then notify the spending entity in question of the grant within which expenses may be incurred and provide the necessary consent for expenses to be incurred by a designated authority within that entity.
All such entities are required under APPM Section 3.3.12.6 to turn over all projected savings to the government as soon as they are anticipated, but no later than May 15 of each year.
It states, “Savings from funds provided after May 15 must be surrendered no later than 30 June,” directing the chief accounting officers to implement strict controls over how any savings, real or potential, are spent.
These regulations prohibited savings from “being held in reserve for possible future excesses,” prohibited postponed expenses from being redistributed to cover new expenses, and prohibited expenditures from being made just because grant monies could become available. The statement read, “Grants that cannot be properly utilized must be surrendered.”
As mandated by the PFMA 2019 earlier in the year, the government forced all ministries, divisions, the four provinces, Azad Kashmir, and Gilgit-Baltistan to turn over their working capital and excess funds held for investment right away and deposit them into the federation’s single treasury account.
According to Article 78 of the Constitution, any money collected by the federal government or on its behalf must be placed into the Public Account of the Federation (PAF) or the Federal Consolidated Fund (FCF). Article 79 mandates that an act of parliament control the custody and payment of funds from and to the central account. The State Bank of Pakistan maintains the cash balances of both FCF and PAF under central account No. 1 (non-food).
All matters pertaining to the FCF and PAF are now governed by the Public Finance Management Act (PFMA), which was passed by the parliament in 2019 at the request of loan agencies. It mandates that the finance division, which is overseen by the federal government generally, run the FCF and PAF.
Furthermore, according to Section 23(2) of the Act, “no authority shall transfer public moneys for investment or deposit from the government account, including the assignment accounts, to any other bank account without the federal government’s prior approval.”
Furthermore, no authority may transfer public funds in violation of sub-section (2) of Section 23 according to Rule 4(4) of the Cash Management and Treasury Single Account Rules 2020, and Section 45 of the Act has superseding effect over all other laws and laws that are inconsistent with this Act.
