- Rejigs capital budget implementation to accelerate growth
- AGF Ogunjimi knocks MDAs over policy non-compliance
BY COBHAM NSA – The Federal Government has warned its Ministries, Departments and Agencies (MDAs) to refrain from awarding contracts without the necessary funds backing.
It what appears a new era of fiscal discipline in capital project execution, the government maintained that going forward, there must be concrete proof of available funds before contracts are awarded.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who issued the warning to MDAs, said government will no longer condone embarrassing actions that go against best practices in financial planning and management, especially in contracts’ award.
Speaking at a Stakeholders’ engagement on the 2025 capital budget organised by the Office of the Accountant General of the Federal (OAGF) in Abuja on Wednesday, Mr Edun said warrants and Authorities to Incur Expenditure (AIEs) must be issued before any legal commitment is made.
Under the revised framework, MDAs are expected to secure warrants before entering into contracts to align public expenditure with cash availability and strict financial regulations.
He said, “For the avoidance of doubt, no letter of award, contract signing, or financial obligation should be entered into unless corresponding warrants and AIEs covering the full or committed portion have been duly released.
“We spend what we have earned, funds must be channelled diligently into investment in equipment and facilities that boost productivity, create jobs, and lift millions out of poverty.”
Also, the Minister explained that distortions costing the economy five percent (5%) of GDP have been removed, boosting revenue inflows into the Federation Account.
According to him, the government’s growth target is seven percent (7%) annually, which is double the population growth rate, to achieve rapid and inclusive development.
Addressing the Stakeholders, Accountant General of the Federation (AGF), Shamsuldeen Ogunjimi said the government is focused on fiscal discipline in capital project execution and frowned at a situation where most MDAs flout procurement processes that create payment challenges for the OAGF.
He said, “The implementation of the policy is mired by gross non-compliance with Public Procurement Act, 2007 and other extant regulations thereby creating financial commitments far beyond the monthly projected cash flows of the federal government.
“We have reviewed the trends where MDA award contracts solely on the basis of budgetary provisions and the resulting consequences which are against the annual budget implementation plan from which cash plans are generated and the funding plans of the government.
“More worrisome is the situation where the cash needs uploaded by most MDA are employee payables and mobilization fees leaving out ongoing and completed projects provided in the budget. This has forced some contractors to either approach the Federal Ministry of Finance or OAGF for intervention because the funds they claimed were used to execute the projects were borrowed from banks at a high interest rate.”
However, the AGF assured MDAs and contractors that genuine contract obligations already captured on the Government Integrated Financial Management Information System (GIFMIS) would be honoured, adding, “We want to restore confidence so that holding a government contract letter means something again. If it is on GIFMIS, it is a government liability and we will fund it.”
On his part, the Director-General, Budget Office of the Federation, Dr. Tanimu Yakubu blamed the slow capital budget performance on revenue shortfalls in early 2025, citing provisions of the Petroleum Industry Act (PIA) 2022 which diverted significant oil earnings to the Nigerian National Petroleum Company Limited (NNPCL) and the Frontier Exploration Fund.
He said “We have initiated moves to amend the Act through the National Assembly to recover lost revenue,” adding that oil price volatility and underproduction further constrained spending.
For the Director of Funds at the OAGF, Steve Ehikhamenor, it is important that MDAs strictly follow budget prioritisation guidelines to match scarce resources with the most critical projects.
He said, “Inside priority, there is another priority. Our goal is to eliminate delays between budget approval and implementation.”
With key budget and procurement stakeholders in attendance, the Forum was packaged as part of government’s efforts to align spending with revenue realities, curb waste, and ensure prompt delivery of capital projects nationwide.
