Finance Division Directs SBP Not to Make Direct Payment to Any Ministry/Division

Finance Division has directed the State Bank of Pakistan (SBP) not to make direct payment to any ministry/division except with the prior approval of the Finance Secretary as per Rules 3(2) and 3(3) of the Cash Management and Treasury Single Account Rules, 2020.

The Finance division in its Office Memorandum with regard to the strategy for the release of funds for the development budget for the financial year 2023-24 directed SBP not to make direct payment to any office, except with the prior approval of the Finance Secretary as per Rules 3(2) and 3(3) of the cash Management and Treasury Single Account Rules, 2020.

According to Finance Division, in pursuance of the provisions of the Public Finance Management Act, 2019, Rule 3(9) of the Cash Management and Treasury Single Account Rules, 2020 and Financial Management and Powers of Principal Accounting Officers Regulations, 2021, the funds release strategy for Development Budget for the Current Financial Year (CFY) 2023-24 is being issued for implementation with immediate effect and until further orders.

The funds for the Development Budget shall be released by the Planning, Development and Special Initiatives (PD&SI) Division out of the PSDP allocation for CFY for approved projects at 15% for Quarter 1, 20% for Quarter 25% for Quarter 3, and 40% for Quarter 4.

Of the total PSDP allocation of Rs 950 billion for FY 2023-24, 15% of funds were released for Q1, FY 2023-24 (Domestic)(Rs. 131 billion), against the surrendered amount for SDGs during FY 2022-23. Rs. 20.26 billion released for approved SDGs schemes for FY 2023-24 Rs. 41 billion, available funds for remaining PSDP Schemes during Q1, FY 2023-24, Rs. 69.74 billion.

Funds amounting to Rs. 11.5 billion are to be further released in respect of foreign exchange components during Q1, FY 2023-24. While executing development projects PD&SI Division and the PAOs concerned shall ensure the implementation of the provisions contained under Chapter III of the Public Finance Management Act, 2019.

Finance Division has issued the following instructions to all the concerned Ministries/ Divisions and Departments and Organizations:

• PD&SI Division shall devise quarterly sector-wise/ project-wise/ Division-wise strategies for the release of funds for PSDP within the appropriations approved by the National Assembly and included in the Schedule of Authorized Expenditure in terms of Article 83 of the Constitution of Pakistan;
• Any proposal for change to the limits prescribed at (i) above shall be considered by the Budget Wing, Finance Division on case to case basis and shall require prior approval of the Finance Secretary;
• Release of funds for approved projects in a Demand for Grant and Appropriation shall be made by the PAO in each Quarter within the above limits.

The PAO shall ensure the availability of sufficient funds for Employees’ Related Expenses for each project;

• PAOs/ Heads of Attached Department/ Heads of Sub-ordinate Office or Project Director shall not make any re-appropriation of funds from ERE to Non-ERE heads of account except with the prior concurrence of Ministry of Planning, Development and Special Initiatives;
• Adequate budgetary allocations on account of Foreign Exchange Component (Rupee Cover) shall be ensured by all relevant PAOs and conveyed to Economic Affairs Division and Finance Division;
• Funds for foreign exchange payments shall require prior approval of the External Finance Wing of the Finance Division.

While examining requests for such funds, the External Finance Wing shall consider the availability of Foreign Exchange;

• section 23 of the Public Finance Management Act, 2019 provides that no authority shall incur or commit any expenditure from the “Federal Consolidated Fund” until the same has been sanctioned by the National Assembly and the expenditure has been provided for the financial year through: (a) schedule of authorized expenditure in terms of Article 83 of the Constitution of Pakistan; (b) supplementary grant or technical supplementary grant as per Article 84 of the constitution duly approved by the Federal Government; or (c) re-appropriation as per section 2 (u) and 11 of the Public Finance Management Act, 2019;
• all payments shall be made through the pre-audit system by all the Accounting Organizations and Offices or through Assignment Account Procedure or any other procedure issued by the Finance Division.

The provisions of the Public Finance Management Act 2019, the Financial Management and powers of Principal Accounting Officers Regulations 2021 and instructions issued by the Planning Commission shall be strictly adhered to by all the PAOs and the Accounting Offices.

The instructions with regard to Supplementary Grants shall be issued by the Budget Wing, Finance Division, separately.

There shall be no requirement of ways and means clearance from the Budget Wing of the Finance Division for the release of the development budget.

Quarter-wise budget allocation & release will be uploaded on the AGPR Servers by the Finance Division, within the above-stated release limits. No payment shall be made over and above the limits by any accounting organization/office except with the prior written approval of the Finance Division.

The Development Wing of the Finance Division shall coordinate and oversee the matters relating to the release of funds for the development budget and other ancillary matters.

Since, Development Budget is released to PD&SI Division, therefore, PAOs may approach the said Division for any issues related to authorization as well as distribution of funds between the approved projects/schemes.