ISLAMABAD: The Ministry of Finance, alerted by the Accountant General of Pakistan Revenue (AGPR), warned all ministries, divisions and heads of all government bodies that their employees’ salaries could be delayed and blocked in the event of insufficient funds in their accounts.
The AGPR had warned the authorities that for the current financial year some government departments and offices had kept insufficient budgets in the relevant heads of account to meet the Employee Related Expenditures (ERE) requirements, adding that this practise could result in excess expenditures over and above the budget allocation, thereby adversely affecting the prudent budget and cash mana.
All those divisions, departments and offices which will have insufficient allocation under ERE heads will be shifted from payroll to supplementary payroll in phase-I. “This will result in delays of receipt of salaries by employees”. In second phase, “salary payments will be stopped and no claim in any other head of account will be processed by the accounting offices till availability of budget in ERE heads.”
Special Secretary Finance and Spokesperson Kamran Ali Afzal said the new strategy was part of financial reforms under the Public Finance Management (PFM) Act 2019 under which PAOs had been given the control of their allocated funds and empowered them with authority and balanced with responsibility.
He said all PAOs may not be fully aware of the principle of fiscal prudence and discipline and would require hand holding for sometime through guidance and awareness campaigns. He ruled out any shortage of funds but observed that ministries and divisions had to follow prudent fiscal operations in line with PFM reforms.
In addition, the Ministry of Finance sent a notice to the secretaries of all ministries, divisions and other Principal Accounting Officers (PAOs) and heads of departments indicating that their employees could face delays and salary cuts in the event of inadequate funds in their accounts.
It told both secretaries and PAOs that in coordination with the AGPR, the Finance Division had drawn up a brief financial ownership preservation plan to ensure that all expenses were made within the allocated and published budget. “No expenditure approved by the accounting offices shall be made available without the availability of funds through the budgetary mechanism,” it stated.
According to this strategy, the accounting offices shall send alerts to the PAOs concerned and to the appointed drawing officers who have left inadequate balances against the heads of the ERE to arrange funds through the budgetary method.
In phase-I, all those branches, agencies and offices that will have inadequate allowance under ERE heads will be transferred from payroll to additional payroll. “This will lead to delays in the receipt of staff salaries.” In the second step, “wage payments will be stopped and no claims will be processed by the accounting offices in any other head of account until budget availability in ERE heads.”
Special Secretary of Finance and Speaker Kamran Ali Afzal said the new policy was part of the financial reforms under the 2019 Public Finance Management (PFM) Act that gave PAOs control over their allocated funds and empowered them with authority and transparency.
He said that all PAOs would not be completely conscious of the concept of fiscal prudence and control, and that advice and awareness drives will need hand keeping for some time.
It was clarified that for the current fiscal year the Finance Division provided PAOs with a single line budget, with the responsibility of maintaining the availability of funds in all heads of account especially ERE. Although the PFM Act allows for the transfer of financial powers to PAOs, as per relevant rules and regulations, it also combines authority with financial ownership liability.
All the federal government’s PAOs and accounting offices were asked to comply entirely with the requirements of the PFM Act and the current plan for improved financial and fiscal control during the financial year.