Moving Funds For Unplanned Projects Banned

The Ministry of Planning, Development, and Special Initiatives has prohibited reallocating funds for unplanned projects without any approval. They also instructed ministries to ask for local currency cover for foreign aid, matching the expenses for the current fiscal year.

These rules have been approved by the Deputy Chairperson Planning Commission. These rules are also shared with all the ministries & are expected to be followed carefully. The M/o PD&SI issued a memo about this on 9th Nov, 2023.

Chief of the Public Investment Program Section, Irfan Khan, said that the Finance Division issued the rules in March 2021. According to these rules, money can be moved from one development plan to another (after approval) by the secretary of the relevant division. They are expected to follow rules & restrictions before moving the funds.

The rules state that if there is an urgent need, then only the Ministry/Division can move funds from the Public Sector Development Programme. The projects must be approved in the budget by the Secretary/PAO.

Ministries are to follow these rules: (i) Check spending amount for projects every month. (ii) Don’t move funds from foreign aid to local currency. (iii) Ongoing projects must be prioritized for reallocation of funds. (iv) Avoid extra funds and time while moving funds for projects. (v) Regional & sectoral allocations must be protected for balanced development. (vi) Follow every rule while moving funds for Foreign Aid Allocation.

According to Chief RIP, ministries can’t move funds for projects that are not on budget. If an unexpected case occurs, it can be referred to M/o PD&SI for consideration.

M/o PD&SI shared that Rs 75 billion is set aside for rupee cover in CFY. On 23rd Oct, a 35% foreign aid budget was allowed for July to Dec. Now Ministries are allowed to spend on projects aided by foreign countries by following updated rules in August 2022.

The Chief of the RIP Section said that due to money constraints, the rupee cover for foreign aid couldn’t be given in PSDP 2023-2024. Project sponsors are also facing money issues due to the new procedure by AGPR. This matter was discussed in the meeting. Based on the meeting, Chairman Irfan Khan asked Ministries/Divisions to review the projects & also focus on rupee cover demand according to expected spending this year.

To get more rupee cover, these options can be considered: (i) PAO can check rupee cover demand & expected spending every month. (ii) Move funds within the overall rupee cover between foreign-aided projects in the same grant. (iii) Move funds from local to foreign aid within the same budgeted projects. (iv) Get more funds through adjustments by M/o PD&SI, subject to using the first two options. (v) Get extra budget from Finance Division for rupee cover.

Ministries/Divisions ought to follow the rules in the PFM Act 2019, PAO’s regulations, 2021, Revolving Fund Procedure 2022 & other guidelines. They must send re-appropriation orders to the Planning Ministry for the record.

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