FG Mandates Budgetary Approval for All MDA Contracts to Combat Fiscal Irregularities

The Federal Government has implemented a stringent new policy, prohibiting all Ministries, Departments, and Agencies (MDAs) from entering into contracts or incurring financial obligations without prior budgetary approval and confirmed cash backing. This decisive measure, detailed in a Federal Treasury Circular dated July 31, 2026, aims to eradicate abandoned projects and enforce robust fiscal discipline across the public sector.

Signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi, the circular addresses ministers, permanent secretaries, heads of extra-ministerial departments and agencies, accounting officers, and federal pay officers. It introduces stricter operational guidelines for the implementation of the 2026 capital budget, a response to persistent breaches of public procurement and financial regulations. The government cited widespread non-compliance with the Public Procurement Act, 2007, and other extant laws governing public expenditure as the impetus for these enhanced measures.

Under the revised Treasury guidelines, no MDA is permitted to issue letters of award, execute contracts, or incur any financial commitment unless it has first obtained a Warrant or Authority to Incur Expenditure (AIE) that covers the full contract value or the committed portion thereof. This Warrant/AIE must be duly released by the Honourable Minister of Finance and Coordinating Minister of the Economy to the Accountant-General of the Federation. To ensure accountability, MDAs are required to attach copies of these Warrants or AIEs, generated via the Government Integrated Financial Management Information System (GIFMIS), as proof of available funding before contracts are awarded or payments processed.

The directive further mandates that all financial commitments, including purchase invoices and employee payables, must not exceed available warrant balances. The Bureau of Public Procurement (BPP) has also been instructed to process only “No Objection” certificate requests that are supported by valid Warrants or AIEs.

Accounting officers are put on notice that awarding contracts without adequate budgetary provision, approval, and cash backing constitutes a serious offence under the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act, 2000. This move reinforces the Federal Government’s revised cash management policy, initially introduced in 2024, which seeks to improve budget implementation, reduce outstanding contractual liabilities, and ensure that capital projects are only initiated when funding is demonstrably secured. MDAs are also now required to submit annual and quarterly cash plans for their capital budgets to the Office of the Accountant-General, with strict deadlines for submission.

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