Finance Ministry Issues Guidelines for Lending to Provinces and PSEs

The Ministry of Finance has announced to lend provinces and Public Sector Entities (PSEs) on account of loans, advances, and investments, which will be subject to re-payment of due loans or deduction at source, reported the Business Recorder.

According to sources, the Ministry has said that the funds for the foreign exchange payments will be approved by the External Finance Wing of the Finance Division after it has considered the availability of foreign exchange.

The instructions for the provision of funds have been forwarded to Principal Accounting Officers (PAOs) of Ministries, Auditor General of Pakistan, Accountant General of Pakistan, State Bank of Pakistan (SBP), and heads of all concerned entities.

The Finance Ministry has also issued the budget release strategy for the current fiscal year (CFY) under the Public Finance Management Act, 2019, Rule 3(9) of the Cash Management and Treasury Single Account 2020, and the Financial Management and Powers of Principal Accounting Officers Regulations, 2021.

The ministry has also issued limits to release funds for the Recurrent Budget of Divisions, Departments, and offices for FY23. These limits suggest the following:

1. Employees Related Expenses (ERE) and pensions payment at the level of 25 percent for each Quarter of FY23.
2. Non-ERE expenditure at the level of 20 percent for the first two quarters, 25 percent for the third quarter, and 35 percent for the fourth quarter.
3. Release of funds for office and residential building rents, commuted value of pension, encashment of LPR, and PM Assistance Packages will be made at 50 percent during each half of FY23.
4. Subsidies will be released by Finance Division to the PAOs on a case-to-case basis.
5. Grants and lending will be released at the level of 20 percent for Q1 and Q2, 25 percent for Q3, and 35 percent for Q4.

The Finance Ministry has also provided the Finance Division with an extensive list of instructions for the release of funds. These instructions cover the provision of funds for ERE and non-ERE Expenses, Contractual and Obligatory Payments, Subsidies, Grants, Lending, Foreign Program Loans, and Grants, etc.

In order to keep the prudent fiscal discipline and sanctity of the budgetary allocations, the ministry has demanded that all stakeholders must make sure that these instructions are followed. The stakeholders include the Finance Division, all PAOs, Head of Departments, Head of Sub-ordinate offices and Autonomous bodies, and all Accounting Organizations and Offices.