ISLAMABAD: Taking strict notice of the financial autonomy claimed by corporate and autonomous entities and executive departments of the federal government resulting in budgetary slippages, the Ministry of Finance has tightened fiscal controls ahead of a quarterly review with the International Monetary Fund (IMF).

The ministry has barred all the federal ministries, divisions and their attached and sub-ordinate offices, corporations, corporate entities and executive departments from creating any charge or liability.

New instructions have been issued to all the ministries, divisions, attached departments, dozens of autonomous and semi-autonomous entities, corporate bodies and executive departments for strict compliance after these institutions claimed financial autonomy.

They took the stance that they “enjoy financial autonomy and that their boards (of directors) are competent to take their financial decisions”. The total number of such bodies and entities is estimated to be around 300 under the federal domain.

Such decisions have frequently included sanctioning new allowances or enhancing rates of existing allowances, the finance ministry said it committed to the IMF last month not to allow any increase in employees-related expenditure including in salaries, pensions or allowances during the current fiscal year.

It referred to rule 12 of Rules of Business (RoB) 1973 which required that “no division shall, without previous consultation with the Finance Division, authorise the issue of any orders, other than orders in pursuance of any general or special delegation made by the Finance Division, which will affect directly or indirectly the finances of the Federation”.

Under the said provisions, the finance ministry issued fresh policy instructions, not only to the above-mentioned entities but also to the Auditor General of Pakistan (AGP) and Accountant General of Pakistan Revenue (AGPR) for strict compliance forthwith.

“No charge on the Federal Budget or receipt be created without consultation of Finance Division”, the new orders making it crystal clear that even the “presence of a representative of Finance Division on the board of an office does not constitute consultation with Finance Division”. Such consultation is required to be undertaken as per prescribed procedure, it added.

Also, all offices are “required to deposit, after carrying out their expenditure as authorised by the federal government through the finance ministry, their annual surpluses in the Federal Consolidated Fund (FCF) promptly under the provision of their laws as well as the Public Finance Management Act 2019”.

Moreover, pay, allowances and their revision of all government employees, including those employed in autonomous, semi-autonomous and corporate bodies would require prior approval of the finance ministry.

The AGP has been directed to ensure that during audits of all offices of the federation, MoF’s specific approvals were available and were verified concerning all expenditures and charges including pay and allowances. Likewise, the AGPR and budget and expenditure wings of the MoF have also been ordered to undertake a review of the existing expenditures of these entities including pay and allowances and track any such expenditure that lacks the MoF’s specific approval.

“Any payments not following these instructions be discontinued,” said the MoF with the directive for completion of this exercise within 30 days. In cases requiring clarity, the expenditure is to be stopped immediately and the matter is referred to the MoF immediately.

Even in the cases of entities where the MoF has already delegated powers under Rules of Business 1973, the AGPR has been required to ensure that such powers were being exercised within the prescribed parameters of the delegation.

Budget and Expenditure Wings have been directed to ensure the production of evidence of approval of the MoF of all expenditures of the said offices and entities during the upcoming budget exercise before authorising budgetary allocations.

Published in Dawn, January 26th, 2024