No unbudgeted supplementary grants allowed under IMF deal, Finance Division warns

ISLAMABAD: In a move to tighten fiscal discipline under IMF obligations, the Finance Division has announced that no supplementary grants will be approved for unbudgeted expenditures — except in rare cases of severe natural calamities.

The decision was communicated through an official memorandum, which aligns with Pakistan’s commitments under the $7 billion Extended Fund Facility (EFF) from the International Monetary Fund (IMF).

The directive clearly states that supplementary grants will only be considered after all funding options — including re-appropriation and Technical Supplementary Grants (TSGs) — have been fully explored.

In exceptional situations where no other resources are available, ministries must follow a strict set of protocols. The Principal Accounting Officer (PAO) must:

  • Certify that all alternative sources have been exhausted

  • Submit a well-documented justification

  • Ensure verification by the relevant Accounting Organisation

  • Obtain endorsement from the Expenditure Wing or related section of the Finance Division

  • Follow all procedures applicable to TSGs

The Finance Division cited constitutional and legal backing for such restrictions, referencing Article 84 of Pakistan’s Constitution and Section 10 of the Public Finance Management Act, 2019.

Under current budgetary rules, authorized officers may re-appropriate funds within their delegated financial authority — but only from released allocations and not from unreleased portions.

The government has already provided additional funds under a separate cost centre to accommodate the Ad-hoc Relief Allowance for the current fiscal year. PAOs are advised to re-appropriate these strictly for relief payments in Q3, and in consultation with the Expenditure Wing.

In case of shortfall under Employees Related Expenses (ERE), departments may transfer funds from non-ERE heads with prior approval. All such transactions must be reflected in the SAP system and documented accordingly.

To avoid end-of-year budgetary mismanagement, the Finance Division has tightened the rules around the 31st May cut-off date for re-appropriations. Late requests will only be considered in specific cases — such as unavoidable June payments, ERE adjustments, or to regularize excess booked expenditures.

Finally, the Finance Division reiterated that any TSG request must be submitted solely by the PAO, accompanied by proof of internal fund identification and assurances that corresponding adjustments will be made within the ministry’s existing allocation.