FEDERAL GOVERNMENT TARGETS ABANDONED PROJECTS WITH BAN ON UNFUNDED CONTRACTS
Read Time:2 Minute, 15 Second
By:Tajudeen Aminat
The Federal Government has prohibited Ministries, Departments and Agencies (MDAs) from awarding contracts or entering into financial commitments without securing the necessary budgetary approval and cash backing, as part of efforts to strengthen fiscal discipline and ensure compliance with procurement laws.
The directive was contained in a Federal Treasury Circular dated July 31, 2026, signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, and addressed to ministers, permanent secretaries, heads of extra-ministerial departments and agencies, accounting officers, and federal pay officers.
According to the circular, the new operational guidelines were introduced following persistent violations of the Public Procurement Act, 2007, and other financial regulations governing public expenditure.
The Accountant-General stated that the measures are intended to reinforce the implementation of the Federal Government’s revised cash management policy and improve adherence to existing procurement and financial rules.
Under the directive, no MDA is permitted to issue letters of award, sign contracts, or incur any financial obligation without first obtaining a Warrant or Authority to Incur Expenditure (AIE) covering the full or committed portion of the contract value.
The circular also requires MDAs to attach copies of Warrants or AIEs generated through the Government Integrated Financial Management Information System (GIFMIS) as proof that funds are available before contracts are awarded or payments processed.
In addition, MDAs were instructed to ensure that financial commitments, including purchase invoices and employee-related obligations, do not exceed the value of available warrants.
The Bureau of Public Procurement (BPP) was equally directed to process only applications for “No Objection” certificates that are backed by valid Warrants or AIEs.
The Accountant-General further reminded accounting officers that awarding contracts without budgetary provision, approval, and cash backing is an offence under the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act, 2000.
To improve budget implementation, all MDAs must submit annual and quarterly cash plans for their capital budgets to the Office of the Accountant-General. Annual cash plans, beginning July 15, 2026, together with the first quarterly cash plan, were to be submitted by July 31, 2026, while subsequent quarterly plans are due by the 15th day of the first month of every new quarter.
The directive also instructs MDAs to prioritise projects in line with the Federal Government’s policy objectives, while the Cash Management Technical Committee will continue reviewing implementation plans and advising the Federal Cash Management Committee on priority projects.
The latest policy reinforces the revised cash management framework introduced in 2024, which seeks to improve budget execution, prevent the award of contracts without available funding, reduce abandoned projects, curb unpaid contractual liabilities, and ensure that capital projects are executed only when adequate funding is in place.
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