The Federal Government has issued a directive banning Ministries, Departments, and Agencies (MDAs) from awarding contracts without cash backing. The policy, effective immediately, is aimed at curbing fiscal indiscipline and ensuring that only projects with confirmed funding are initiated.
Background and Rationale
The directive was announced by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, during a press briefing in Abuja. She emphasized that the government is committed to transparency and accountability in public procurement. According to her, many projects have been left uncompleted due to lack of funding, leading to wastage of resources.
Mrs. Ahmed stated that the new policy will ensure that no contract is awarded unless there is a clear source of funding. This is part of broader reforms to strengthen the budget process and improve fiscal discipline.
Key Provisions of the Directive
Under the new directive, all MDAs must provide evidence of cash backing for any contract before it is awarded. This includes projects funded through the capital budget, as well as those supported by donor funds or other sources. The Ministry of Finance will work with the Budget Office to ensure compliance.
The directive also requires MDAs to submit quarterly reports on contract awards and cash backing status. This will enable the government to monitor implementation and take corrective actions where necessary.
Impact on MDAs and Projects
The policy is expected to slow down the award of new contracts in the short term, as MDAs will need to secure funding before proceeding. However, it is anticipated to reduce the incidence of abandoned projects and improve the efficiency of public spending.
Some experts have welcomed the move, noting that it will help to prioritize projects and ensure that scarce resources are channeled to high-impact initiatives. Others have expressed concern that it could delay critical infrastructure projects if funding is not readily available.
Government's Commitment to Fiscal Discipline
This directive is part of the government's broader efforts to enhance fiscal discipline and reduce the budget deficit. The Minister reiterated that the government is determined to ensure that every naira spent is accounted for and that projects are delivered on time.
The directive is also in line with the recommendations of the Fiscal Responsibility Act, which emphasizes the need for prudent management of public funds. The government is expected to issue detailed guidelines to MDAs in the coming weeks.
