FG Restricts MDAs From Awarding Unfunded Contracts

The Federal Government has barred ministries, departments, and agencies from awarding contracts or entering into any financial commitments without first securing the required budgetary approval and cash backing, in a move aimed at tightening fiscal discipline and enforcing compliance with procurement laws.

The directive was contained in a Federal Treasury Circular dated July 31, 2026, and signed by the Accountant-General of the Federation, Dr Shamseldeen Ogunjimi.

The circular, obtained by our correspondent on Sunday, was addressed to key government officials, including ministers, permanent secretaries, heads of extra-ministerial departments and agencies, accounting officers, and federal pay officers.

According to the Accountant-General, the fresh operational guidelines became necessary following widespread violations of the Public Procurement Act, 2007, and other financial regulations governing public expenditure.

The circular stated, “Further to the Treasury Circular… captioned ‘Revised Policy on Cash Management and Bottom-Up Cash Plan Operational Guidelines,’ it has become necessary to strengthen and deepen the implementation of the policy sequel to the observed non-compliance with the Public Procurement Act, 2007, and other extant laws and regulations.”

It added, “To ensure full compliance and seamless implementation of the policy, the following operational guidelines for the implementation of the 2026 capital budgets are hereby issued.”

A key provision of the circular stipulates that no MDA can issue letters of award, sign contracts, or incur financial obligations without first obtaining a Warrant or Authority to Incur Expenditure.

It stated, “No expenditure shall be incurred except on the authority of a Warrant/AIE (including employee payables). Accordingly, no MDA shall issue letters of award, sign contracts, or enter into any financial obligations unless the corresponding Warrant/AIE covering the full or committed portion of the contract sum has been duly released by the Honourable Minister of Finance and Coordinating Minister of the Economy to the Accountant-General of the Federation.”

The Office of the Accountant-General also directed MDAs to download and attach copies of Warrants or AIEs generated through the Government Integrated Financial Management Information System (GIFMIS) as evidence that funds are available before contracts are awarded or payments are processed.

The circular further warned that financial commitments, including purchase invoices and employee payables, must not exceed the value of available warrants.

It said, “All MDAs shall ensure that financial commitments (purchase invoices and employee payables) are limited to uncommitted warrant balances;and at no time should financial commitments exceed the amount of Warrants/AIEs available.”