Ministries Told to Return Unspent Funds Within 10 Days

The Ministry of Finance has directed all ministries, divisions, departments, and autonomous bodies to surrender, within 10 days, all savings and unspent allocations that are not expected to be utilized during the current fiscal year, as the government moves to finalize revised estimates for FY2025-26 and prepare the budget for FY2026-27.

In an official communication, the Finance Ministry instructed principal accounting officers to surrender anticipated savings under all four major expenditure heads to the Finance Division by May 10. They were also told not only to issue surrender orders but to communicate the surrendered amounts to the ministry’s Budget Section by the same date for entry into the computer system.

Under Section 12 of the Public Finance Management Act, 2019, ministries and divisions are required to surrender savings to the Finance Division by May 31 each year. However, the ministry said the deadline had been brought forward by nearly a month at the direction of the Public Accounts Committee to improve fiscal discipline and make funds available where needed in a timely manner.

The move comes at a time when the PSDP has already come under pressure. The development programme has been reduced by Rs. 173 billion, or about 20 percent of its original allocation, to divert funds to the prime minister’s subsidy package aimed at cushioning the impact of rising petroleum prices after the US-Israel war on Iran.

Even before the cut, utilisation of development spending remained weak. Federal entities spent less than half of their allocations on public welfare schemes during the first nine months of the fiscal year. According to the Ministry of Planning and Development, total PSDP utilisation during July-March stood at Rs. 415 billion, or 41.5 percent of the Rs. 1 trillion allocation. This was slightly better than the same period last year, when spending stood at Rs. 400 billion, or 36.4 percent of the Rs. 1.1 trillion allocation.

An exception was seen in schemes for ruling parliamentarians, where nearly 70 percent of allocations were utilised in the first nine months. The government began bulk disbursements under the Sustainable Development Goals Achievement Programme after the first five months of the fiscal year.

By the end of March, the Planning Commission had authorised nearly 90 percent, or Rs. 57.23 billion, of the revised annual allocation of Rs. 63.24 billion for the programme, of which more than Rs. 44 billion, or 70 percent, had already been spent.

As of March 31, ministries and divisions had sanctioned Rs. 589 billion, against which Rs. 414.96 billion, or 45.6 percent of the total allocation, had been reported as expenditure.

Under the release mechanism for the current fiscal year, the government was supposed to release 15 percent of the budgeted allocation in the first quarter, 20 percent in the second, 25 percent in the third and the remaining 40 percent in the last quarter. This meant around 60 percent of allocations should have been released in the first three quarters.

The Public Accounts Committee has also directed the Finance Ministry to ensure early surrender of unused funds and hold accountable those departments that later seek additional allocations despite failing to utilise their original budgets.