ISLAMABAD: Alerted by the Accountant General of Pakistan Revenue (AGPR), the Ministry of Finance has warned all ministries, divisions and heads of all government institutions that salaries of their employees could be delayed and blocked in case of insufficient funds in their accounts.

The AGPR had alerted authorities concerned that “some government departments and offices have kept insufficient budget in relevant heads of account to meet requirements of the Employee Related Expenses (ERE) for the current financial year” adding that “this practice may result into excess expenditures, over and above the budgetary allocation, thus, adversely affecting the prudent budget and cash management of federal government.”

In response, the Ministry of Finance sent a notification to secretaries of all ministries, divisions and other principal accounting officers (PAO) and heads of departments saying that in case of insufficient funds in their accounts, their employees could face delays and stoppage of their salaries.

It informed all secretaries and PAOs that the Finance Division, in consultation with the AGPR, has prepared a brief strategy to maintain financial propriety to ensure that all expenditures were made within the allocated and released budget. “There shall not be any expenditure approved by the accounting offices without availability of funds- through budgetary mechanism,” it said.

Under this strategy, the accounting offices shall issue alerts to the concerned PAOs and the designated drawing officers, having left with insufficient balances against the ERE heads for arrangement of funds through budgetary process.

All those divisions, departments and offices which will have insufficient allocation under ERE heads will be shifted from payroll to supplementary payroll in phase-I. “This will result in delays of receipt of salaries by employees”. In second phase, “salary payments will be stopped and no claim in any other head of account will be processed by the accounting offices till availability of budget in ERE heads.”

Special Secretary Finance and Spokesperson Kamran Ali Afzal said the new strategy was part of financial reforms under the Public Finance Management (PFM) Act 2019 under which PAOs had been given the control of their allocated funds and empowered them with authority and balanced with responsibility.

He said all PAOs may not be fully aware of the principle of fiscal prudence and discipline and would require hand holding for sometime through guidance and awareness campaigns. He ruled out any shortage of funds but observed that ministries and divisions had to follow prudent fiscal operations in line with PFM reforms.

It was explained that Finance Division had provided one line budget to PAOs for the current fiscal year, with the responsibility to keep availability of funds in all heads of accounts, particularly ERE. While the PFM Act provides for delegation of financial powers to PAOs, it also balances authority with responsibility for financial propriety as per applicable rules and regulations.

All the PAOs and accounting offices of the federal government have been asked to fully comply with the provisions of the PFM Act and the new strategy for better financial and budgetary management during the financial year.

Published in Dawn, December 9th, 2020