…Cautions MDAs against unfunded contract awards
From Adanna Nnamani, Abuja
The federal government has said it is designing strategies to fund the extended 2024 and 2025 capital budgets as they fall due, with emphasis on priority projects of the administration.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, gave the assurance Wednesday in Abuja at a stakeholders’ engagement and sensitisation meeting on the implementation of the extended capital budgets under the Bottom-Up Cash Planning Policy.
Edun explained that the meeting was organised to align the peculiarities of Ministries, Departments, and Agencies (MDAs) with the new operational process to ensure smooth and effective budget execution.
According to him, “We are putting in place measures to fund the extended 2024 and 2025 capital budgets as they fall due particularly, the priority projects of the government. This meeting is scheduled to align your peculiarities with the new process as we aggressively progress in the implementation of the budgets.”
He stressed that no MDA should award contracts or enter into financial commitments without first obtaining warrants or Authority to Incur Expenditure (AIEs) confirming the availability of funds.
The Minister disclosed that the Accountant-General of the Federation had been directed to develop a new business process enabling MDAs to download and attach warrants/AIEs as proof of funds availability during tender board meetings.
“Henceforth, Warrants/AIEs will be issued to MDA prior to legal commitment to serve as evidence of funds available for award of contracts or processing of payment for ongoing and completed project. For the avoidance of doubt, you are to ensure that no letter of award is issued, contract signed, or enter into any financial obligation unless the corresponding Warrants/AIEs covering the full or committed portion of the contract sum has been duly released.
“It is therefore, a call for you all to prudently manage the limited resources that will be allocated to your MDA as well as optimize revenue realization as they fall due. In addition, necessary controls must be put in place to avoid discretionary spending,” Edun stated, adding that disbursement of funds would continue to be done centrally by the Treasury.
In his remarks, the Accountant General of the Federation, Shamseldeen Ogunjimi, lamented that non-compliance with the Public Procurement Act and other regulations had created financial commitments far beyond the Federal Government’s monthly cash flow projections.
Ogunjimi, noted that many MDAs award contracts solely on the basis of budgetary provisions without cash plan alignment, forcing some contractors to borrow at high interest rates to execute projects.
The AGF listed new compliance requirements for MDAs, including submission of extended 2024 and 2025 budget implementation plans in line with government priorities, attachment of warrants/AIEs to procurement documents before contract awards, and adherence to revised spending limits on the Government Integrated Financial Management Information System (GIFMIS) platform.
He assured that the Treasury had consolidated outstanding cash plans and warranted them in line with the revised cash management policy to ensure smooth budget execution.
“Distinguished participants, this programme is designed to address some of the challenges faced in the past months and to interact with the stakeholders to obtain some relevant inputs from the operators that may aid in the implementation of the new process. Let me at this juncture, assure you that the Treasury has taken all necessary steps to guarantee hitch free implementation,” the AGF stated.
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