The federal government has barred Ministries, Departments and Agencies (MDAs) from awarding contracts or entering into financial commitments without first obtaining the necessary spending warrants, as part of efforts to strengthen public financial management and curb the accumulation of unfunded liabilities.
Key Highlights
- The Federal Government has barred Ministries, Departments and Agencies (MDAs) from awarding contracts or making financial commitments without approved spending warrants.
- The directive is aimed at strengthening public financial management and preventing unfunded liabilities.
- Budgetary allocations alone no longer constitute legal authority to spend public funds.
- MDAs must obtain spending warrants or authority to incur expenditure before issuing contract awards or signing agreements.
- The revised cash management framework abolishes the monthly cash request system for warrant releases.
The directive was contained in a circular signed by the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele.
According to the circular, the revised bottom-up cash management policy framework is designed to ensure stricter compliance with statutory and regulatory provisions governing public finance.
Under the new framework, no MDA is permitted to issue letters of award, sign contracts or incur financial obligations unless the corresponding warrant or authority to incur expenditure, covering the full or committed portion of the contract value, has been approved by the Minister of Finance and released to the accountant-general of the federation.
The circular also clarified that budgetary allocations alone do not constitute legal authority to spend public funds.
“Estimates contained in the Appropriation Act or budgetary provisions do not confer automatic spending authority.
“Only duly released warrants or authorities to incur expenditure issued by the minister of finance and coordinating minister of the economy, in line with Financial Regulation 301, confer legal authority to incur expenditure,” the circular stated.
The revised policy is anchored on relevant provisions of the Financial Regulations, the Fiscal Responsibility Act, 2007, the Public Procurement Act, 2007 and the Independent Corrupt Practices and other related offences Commission (ICPC) Act.
The federal government said the new measures are intended to align financial commitments with available funds, strengthen expenditure controls and prevent the growing incidence of contracts awarded without adequate financial backing.
As part of the reforms, the requirement for MDAs to submit monthly cash requests before the release of warrants has been abolished.
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Instead, warrants will now be issued based on approved budget implementation priorities and the availability of funds under the capital development fund.
The circular further directed all MDAs to prepare quarterly cash plans aligned with their procurement schedules and ministerial priorities for submission to the office of the accountant-general of the federation to improve cash flow forecasting and budget implementation.
The government warned that accounting officers who violate the directive will be held personally liable for any commitments arising from contracts awarded without the required approvals.
It noted that defaulters could face sanctions under the Financial Regulations, the Public Service Rules, the Fiscal Responsibility Act and other applicable laws governing public financial management.
The directive takes immediate effect and supersedes all previous instructions inconsistent with the revised policy.
It also mandates that all 2026 capital projects executed by Ministries, Departments and Agencies must comply fully with the new cash management framework.
The federal government directed accounting officers, directors, heads of finance and accounts, as well as internal audit departments across MDAs and other government institutions to ensure strict compliance with the directive.
