Federal Government Bars MDAs from Awarding Unfunded Contracts
The Federal Government has directed all Ministries, Departments and Agencies (MDAs) to refrain from awarding contracts or entering into any financial commitments without first obtaining the necessary budgetary approval and cash backing, as part of efforts to strengthen fiscal discipline and curb abandoned projects.
The directive was contained in a Federal Treasury Circular dated July 31, 2026, and signed by the Accountant General of the Federation, Dr. Shamseldeen Ogunjimi. The circular, addressed to ministers, permanent secretaries, heads of extra ministerial departments and agencies, accounting officers and federal pay officers, stated that the new operational guidelines became necessary following widespread violations of the Public Procurement Act, 2007, and other financial regulations governing public expenditure.
According to the circular, “No expenditure shall be incurred except on the authority of a Warrant/AIE (including employee payables). Accordingly, 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 by the Honourable Minister of Finance and Coordinating Minister of the Economy to the Accountant General of the Federation.”
To ensure compliance, the Office of the Accountant General directed MDAs to attach copies of Warrants or Authorities to Incur Expenditure (AIEs) generated through the Government Integrated Financial Management Information System (GIFMIS) before contracts are awarded or payments processed. It further warned that financial commitments, including purchase invoices and employee payables, must not exceed the value of available warrants.
The Bureau of Public Procurement was also instructed to process only requests for “No Objection” certificates backed by valid Warrants or AIEs. The Accountant General reminded accounting officers that awarding contracts without adequate funding constitutes an offence under the ICPC Act 2000, stressing the need for strict adherence to existing procurement and financial regulations.
In addition, all MDAs were directed to submit annual and quarterly cash plans for their capital budgets to the Office of the Accountant General. The circular stated that annual cash plans, beginning from July 15, 2026, alongside the first quarterly cash plan, were to be submitted on or before July 31, 2026, while subsequent quarterly plans must be filed by the 15th day of the first month of each new quarter.
The circular also instructed MDAs to prioritise projects in line with the Federal Government’s policy objectives, noting that the Cash Management Technical Committee would continue reviewing budget implementation plans and advising the Federal Cash Management Committee on priority projects. Accounting officers, directors of finance and internal auditors were urged to ensure prudent cash management and give the directive the “widest circulation and compliance.”
The latest directive reinforces the Federal Government’s revised cash management policy introduced in 2024 to improve budget implementation, prevent the award of contracts without available funding, reduce abandoned projects and ensure that capital projects are executed only when adequate budgetary provisions and cash backing are in place.