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Wednesday May 22, 2024

Guidelines issued to regulate foreign exchange payments

By Mehtab Haider
April 02, 2023
A man counts dollar bills. — AFP/File
A man counts dollar bills. — AFP/File

ISLAMABAD: The government has bound all ministries and divisions to seek permission from External Finance Wing of the Ministry of Finance for all commitments involving foreign exchange for payment of subscriptions and contributions to international organisations.

In compliance to ensure financial discipline for reviving the stalled IMF programme, the Ministry of Finance issued guidelines through a fresh circular. “All commitments involving foreign exchange, including subscriptions and contributions to the international organisations, shall only be made with the prior concurrence of External Finance Wing of the Finance Division,” the circular instructed.

The financial procedure of the federal government has been laid down in articles 78 to 84 of the Constitution. It broadly prescribes that no expenditure from the Federal Consolidated Fund shall be made unless it is duly authorised by the National Assembly and specified in the Schedule of Authorised Expenditure, so authenticated by the prime minister. Furthermore, the federal government shall have power to authorise additional expenditures (supplementary grants) during a financial year from the Federal Consolidated Fund, whether the expenditure is charged by the Constitution upon that fund or not. In pursuance of Article 79 of the Constitution, the Public Finance Management Act 2019 has been enacted by the federal government. The Section 22 of the Act provides that custody and operation of Federal Consolidated Fund and Public Account of Federation shall vest in the Finance Division under supervision of federal government.

Furthermore, under Section 23 of the Act, no authority shall incur or commit any expenditure or enter into any liability involving expenditure from the Federal Consolidated Fund and Public Account of the Federation until the same has been sanctioned by a duly empowered competent authority, and the expenditure has been provided for the financial year through Schedule of Authorised Expenditure; or Supplementary Grant and Technical Supplementary Grant; or Re-Appropriation. Moreover, no authority shall transfer public money for investment or deposit from government accounts, including assignment accounts, to other bank accounts without prior approval from the federal government.

According to Rules of Business 1973, Finance Division has been mandated to manage the finances of federal govemment and financial matters affecting the country as a whole. The Finance Division has emphasised a number of times efficient, prudent and disciplined management of available resources by all the Principal Accounting Officers (PAOs) and other persons authorised to spend public money over the past year. These instructions have been issued at the time of allocation of funds through IBCs in May 2022, Funds Release Strategy in July-August 2022 and January 2023 and Commitment Control Guidelines in February 2022. In addition, Financial Management and Powers of PAOs Regulations 2021 also elaborate responsibilities and functions assigned to the PAOs and heads of departments/offices.

The Finance Division has also laid down the procedure and criteria for release of budgetary funds to the autonomous bodies, organisations, commissions, authorities, entities and corporations as grant-in-aid.In the light of above stated position, and in order to maintain financial discipline, it is re-emphasised that all expenditures should be based on well-defined plans and should remain within the allocated and released budget. No expenditure should be approved by the PAOs or other authorised officers and the accounting officers without availability of funds through budgetary mechanism.