MoF Announces Strategy for Fund Release: Direct Payments through SBP by Offices Prohibited

Pakistan Implements New Financial Regulations and Fund Release Strategy for 2024-25 Development Budget

ISLAMABAD: The Ministry of Finance has introduced stringent controls on direct payments through the State Bank of Pakistan (SBP), mandating prior approval from the Finance Secretary according to the Cash Management & Treasury Single Account Rules, 2024. This move is part of a broader strategy to streamline fund releases for the 2024-25 development budget, ensuring adherence to the Public Finance Management Act, 2019, and other regulatory frameworks.

In a positive note for the economy, SBP’s foreign exchange reserves have seen an uptick, increasing by $16 million to a total of $9.4 billion. This financial adjustment comes alongside a comprehensive funds release strategy aimed at optimizing the allocation and utilization of the development budget for the fiscal year 2024-25.

The new strategy outlines a structured approach to budget releases, with allocations set at specific percentages across the fiscal quarters, ensuring a disciplined and phased disbursement of funds for approved projects. This includes a detailed mechanism for the release of funds for foreign exchange payments, emphasizing the need for prior approvals and adherence to established financial management regulations.

The Ministry of Finance has communicated these directives to all Ministries/Divisions for immediate implementation, marking a significant step towards enhancing fiscal discipline and governance in the country’s development expenditure.

Islamabad Implements New Financial Controls Amid Economic Strategy Overhaul

In a significant move to streamline financial management and enhance accountability within government spending, the Ministry of Finance has announced a comprehensive set of measures aimed at regulating the release and utilization of funds, particularly for development projects in the fiscal year 2024-25. This decision, as revealed by well-informed sources to Business Recorder, includes a pivotal directive that prohibits any office from making direct payments through the State Bank of Pakistan (SBP), barring exceptions that have received explicit approval from the Finance Secretary.

This directive is part of a broader strategy outlined in the Cash Management & Treasury Single Account Rules, 2024, underscoring the government’s commitment to prudent fiscal management as per the guidelines of the Public Finance Management Act, 2019, and the Financial Management and Powers of Principal Accounting Officers Regulations, 2021.

In a related development that signals a positive outlook for the country’s economic stability, the SBP’s foreign exchange reserves have witnessed a modest increase of $16 million, bringing the total reserves to a reassuring $9.4 billion. This financial cushion is critical for the country’s ability to manage its international payment obligations and to foster a conducive environment for economic growth.

The newly introduced funds release strategy for the development budget of the fiscal year 2024-25 is designed to ensure a disciplined and phased allocation of resources across various projects. According to the strategy, the Planning, Development, and Special Initiatives (PD&SI) Division will authorize funds out of the Public Sector Development Program (PSDP) allocation for approved projects, adhering to a quarterly distribution framework. This structured approach aims to optimize the utilization of funds, ensuring that development projects are adequately financed throughout the year while maintaining fiscal discipline.

Furthermore, the strategy emphasizes the importance of adhering to the provisions of the Public Finance Management Act, 2019, throughout the execution of development projects. It mandates that any re-appropriation of funds from Employee Related Expenses (ERE) to Non-ERE heads of account must receive prior concurrence from the PD&SI Division, among other stipulations designed to enhance transparency and accountability in public sector financial management.

The Ministry of Finance has also highlighted the role of the Development Wing in coordinating and overseeing the release of funds for the development budget, ensuring that all processes are aligned with the government’s financial management framework. Additionally, the strategy removes the requirement for ways and means clearance from the Budget Wing of the Finance Division for the release of the development budget, streamlining the process further.

This comprehensive set of measures reflects the government’s resolve to strengthen its financial management practices, aiming to ensure that development spending is both efficient and effective. As Pakistan navigates through its economic challenges, these reforms are expected to play a crucial role in stabilizing the economy and laying the groundwork for sustainable growth.