The Finance Division has unveiled the strategy for releasing funds for the development and recurrent budget for fiscal year 2026-27. An office memorandum issued by the division states that, in pursuance of the provisions of the Public Finance Management Act, 2019 and the Financial Management & Powers of Principal Accounting Officers (PAOs) Regulations, 2021, the funds release strategy for the development budget for FY2026-27 is being issued for implementation with immediate effect and until further orders.
Quarterly Allocation Breakdown for PSDP
Funds for the development budget will be authorized by the Planning, Development & Special Initiatives (PD&SI) Division out of the Public Sector Development Programme (PSDP) allocation for FY2026-27 for approved projects at 15 percent for Quarter 1, 20 percent for Quarter 2, 25 percent for Quarter 3, and 40 percent for Quarter 4. While executing development projects, the PD&SI Division and PAOs concerned must ensure adherence to the provisions of the Public Finance Management Act, 2019.
Role of PD&SI Division and PAOs
The PD&SI Division will devise a quarterly sector/project/division-wise strategy for the release of PSDP funds within the approved appropriation. Any proposal for a change to the quarterly limits will be considered by the Budget Wing of the Finance Division on a case-to-case basis and will require prior approval of the Finance Secretary. Release of funds for approved projects in the Demand for Grants and Appropriations will be made by PAOs in each quarter as authorized by the PD&SI Division within the above limits.
Employee Related Expenditure Safeguards
PAOs must ensure the availability of sufficient funds for employee-related expenses for each project. PAOs, Heads of Attached Departments, Heads of Subordinate Offices, and Project Directors are not permitted to re-appropriate funds from employee-related expenditures to non-employee related expenditures (heads of account) except with prior concurrence of the PD&SI Division.
Foreign Exchange and Payment Procedures
Adequate budgetary allocations for the foreign exchange component (rupee cover) must be ensured by all PAOs and conveyed to the PD&SI Division, Economic Affairs Division, and Finance Division. Funds for foreign exchange payments require prior approval of the External Finance Wing of the Finance Division. All payments must be made through the pre-audit system or through the Assignment Account Procedure, or any other procedure issued by the Finance Division from time to time. A separate Assignment Account must be opened for each project.
