Fri. Mar 1st, 2024
Reappropriation of funds bannedReappropriation of funds banned

Ministry of Planning, Development, Projects and Special Initiatives urges Ministries/Divisions to submit requests for rupee cover corresponding to foreign aid, aligning with the projected expenditures for the Current Fiscal Year (CFY).

The Ministry of Planning, Development, and Special Initiatives, under the approval of the Deputy Chairman of the Planning Commission, has issued directives to all Ministries/Divisions for strict adherence. An Office Memorandum (OM) was issued on November 9, 2023, reinforcing these instructions.

In a separate OM, Irfan Khan from the Chief Public Investment Program (RIP) Section highlighted the Financial Management and Powers of PAOs Regulations, 2021, issued by the Finance Division in March 2021.

These regulations delegate the authority for re-appropriation of budgeted funds within development schemes to the Secretary/PAO of the respective Division, subject to approval by the competent forum and inclusion in the demand(s) for grant.

The Ministry addressed concerns raised by the International Monetary Fund (IMF) stating that the Public Sector Development Program (PSDP) is deemed unaffordable.

Guidelines for re-appropriation of funds among budgeted projects include monthly project-wise allocation reviews by the PAO, restricting re-appropriation from foreign aid to local rupee allocation, allowing re-appropriation only to approved heads of accounts/provisions, prioritizing completion of ongoing projects, avoiding cost/time overruns, safeguarding regional and sectoral allocations, and specifying re-appropriation for Foreign Aid Allocation (Rupee cover).

Despite these guidelines, Ministries/Divisions are explicitly prohibited from re-appropriating funds under PSDP to un-budgeted projects. In unavoidable circumstances, such cases may be referred to the Ministry of Planning, Development, and Special Initiatives for consideration on a case-by-case basis, following the direction of the National Economic Council (NEC).

To address fiscal constraints, the Ministry allocated Rs 75 billion as rupee cover for foreign-aided projects during the CFY, allowing Ministries/Divisions to release funds. However, a reported shortfall in rupee cover against estimated disbursements led to discussions in meetings held by the Finance Division and Economic Affairs Division.

Chief RIP Section, Irfan Khan, urged Ministries/Divisions to review projects, emphasizing the demand for rupee cover against foreign aid based on the expenditure during the CFY. Various options were outlined to meet additional rupee cover demands, including reviewing requirements, re-appropriating funds within the overall rupee cover, adjusting funds between local and foreign aid allocations, seeking additional funds through inter-grant adjustment, and approaching the Ministry of Planning, Development, and Special Initiatives for additional demand, among others.

Ministries/Divisions were reminded to comply with guidelines, instructions, and rules outlined in the PFM Act, 2019, Financial Management and Powers of PAOs Regulations, 2021, Revolving Fund Account Procedure 2022, and GFR, among others.

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