FG Tightens Budget Rules, Bars MDAs from Awarding Unfunded Contracts
The Federal Government has barred Ministries, Departments and Agencies (MDAs) from awarding contracts, signing agreements or incurring financial obligations without approved expenditure warrants and cash backing, in a move aimed at strengthening fiscal discipline and improving public financial management.
The directive, contained in a Federal Treasury Circular dated July 31, 2026, introduces stricter guidelines for implementing the 2026 capital budget as the government seeks to curb the award of unfunded contracts and ensure that spending aligns with available resources.
Signed by the Accountant-General of the Federation, Shamseldeen Ogunjimi, the circular was addressed to ministers, permanent secretaries, heads of extra-ministerial departments and agencies, service chiefs, the Governor of the Central Bank of Nigeria, the Clerk of the National Assembly, the Chief Registrar of the Supreme Court, heads of diplomatic missions and other federal institutions.
Under the new guidelines, MDAs are prohibited from issuing letters of award, signing contracts or entering into any financial commitment unless they have first received the appropriate Warrant or Authority to Incur Expenditure (AIE) covering either the full contract value or the portion to be committed.
“In compliance with the provisions of Financial Regulations 318 and 415 respectively, no expenditure shall be incurred except on the authority of a Warrant/AIE (including employee payables),” the circular stated.
It added that “no MDA shall issue letters of award, sign contracts, or enter into any financial obligations unless the corresponding Warrant/AIE covering the full or committed portion of the contract sum has been duly released.”
To reinforce compliance, the government directed MDAs to generate and attach copies of their Warrants or Authorities to Incur Expenditure from the Government Integrated Financial Management Information System (GIFMIS) before contracts are awarded or payments are processed, to provide proof that adequate funds have been made available.
The circular further instructed that all financial commitments—including purchase invoices and employee-related obligations—must remain within the limits of available, uncommitted warrant balances.
“At no time should financial commitments exceed the amount of Warrants/AIEs available,” the Accountant-General said.
In a related measure, the Bureau of Public Procurement (BPP) was directed to process only applications for Certificates of No Objection that are supported by valid Warrants or Authorities to Incur Expenditure, effectively linking procurement approvals to confirmed funding availability.
The Treasury also reminded accounting officers that awarding or signing contracts without budgetary provision, approval and cash backing constitutes an offence under the Independent Corrupt Practices and Other Related Offences Commission (ICPC) Act, 2000.
“Accounting Officers are invited to note that it is an offence under the ICPC Act 2000 to award or sign any contract without budgetary provision, approval and cash backing,” the circular stated.
Beyond tightening procurement procedures, the Federal Government directed all MDAs to prepare and submit annual cash plans for their 2026 capital budgets to the Office of the Accountant-General of the Federation. The plans, beginning from July 1, 2026, are expected to guide cash releases and project execution throughout the fiscal year, with quarterly updates to be submitted at the beginning of each quarter.
The circular also instructed ministries and agencies to prioritise projects in line with the Federal Government’s policy objectives and available funding rather than approved budget allocations alone.
According to the Office of the Accountant-General, the new measures were introduced following cases of non-compliance with the Public Procurement Act, 2007, the Financial Regulations and earlier Treasury Circulars on cash management and bottom-up budget planning.
The Accountant-General directed accounting officers, directors of finance and accounts, and heads of internal audit across MDAs to ensure strict adherence to the new framework, stressing that effective cash management would depend on aligning project implementation with available warrants and approved expenditure authorities.
The Cash Management Technical Committee will continue to review budget implementation plans and advise the Federal Cash Management Committee on project priorities to ensure government spending remains consistent with fiscal objectives.
The tighter spending controls come as the Federal Government prepares to implement a record ₦68.32 trillion expenditure plan for 2026. The budget projects revenues of ₦36.87 trillion, leaving an estimated fiscal deficit of ₦31.46 trillion, which the government plans to finance largely through domestic and external borrowing.
The latest directive underscores the administration’s efforts to strengthen budget execution, improve accountability in public spending and reduce the accumulation of unfunded contractual obligations that have weighed on government finances in previous years. Nigeria Revenue Service Unveils Tax Guidelines for Virtual Assets
