FG Tightens Spending Rules, Bans MDAs from Awarding Contracts Without Budgetary Backing
FG Tightens Spending Rules, Bans MDAs from Awarding Contracts Without Budgetary Backing
The Federal Government has introduced stricter financial controls by prohibiting Ministries, Departments and Agencies (MDAs) from awarding contracts or entering into financial commitments without first obtaining budgetary approval and confirmed cash backing.
The directive, contained in a Federal Treasury Circular dated July 31, 2026, was signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, as part of efforts to strengthen fiscal discipline and ensure strict adherence to public procurement regulations.
The circular, addressed to ministers, permanent secretaries, heads of extra-ministerial departments and agencies, accounting officers and federal pay officers, followed concerns over persistent violations of the Public Procurement Act, 2007, and other financial regulations governing public expenditure.
According to the circular, the new operational guidelines are designed to reinforce the implementation of the government’s revised cash management policy and improve compliance across all federal institutions.
Under the new rules, no MDA is permitted to issue letters of award, sign contracts or undertake any financial obligation unless it has first secured a Warrant or Authority to Incur Expenditure (AIE) covering the entire contract value or the committed portion of the contract.
The Accountant-General stressed that no expenditure should be incurred without the appropriate Warrant or AIE duly released by the Minister of Finance and Coordinating Minister of the Economy to the Office of the Accountant-General.
To guarantee that contracts are backed by available funds, the Office of the Accountant-General directed all MDAs to generate and attach copies of Warrants or AIEs through the Government Integrated Financial Management Information System (GIFMIS) before contracts are awarded or payments processed.
The circular also instructed MDAs to ensure that all financial commitments, including purchase invoices and employee-related obligations, remain within the limits of available and uncommitted warrant balances, warning that commitments must never exceed the amount covered by the approved warrants.
In addition, the Bureau of Public Procurement (BPP) was directed to process only applications for “No Objection” certificates that are supported by valid Warrants or AIEs.
The Accountant-General further reminded accounting officers that awarding contracts without budgetary provision, approval and cash backing constitutes an offence under the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act, 2000.
As part of measures to improve budget implementation, all MDAs have also been directed to submit annual and quarterly cash plans for their capital budgets to the Office of the Accountant-General.
The circular specified that annual cash plans, effective from July 15, 2026, together with the first quarterly cash plan, were due on or before July 31, 2026, while subsequent quarterly plans must be submitted by the 15th day of the first month of each new quarter.
It further urged MDAs to prioritise projects and programmes in line with the Federal Government’s policy objectives, noting that the Cash Management Technical Committee would continue to review implementation plans and advise the Federal Cash Management Committee on priority projects, while accounting officers and directors of finance would be held responsible for prudent cash management in their respective institutions.
