Quarterly fund release schedule and tighter financial controls introduced to improve cash management and execution of development projects.
ISLAMABAD: The Ministry of Finance has unveiled a comprehensive strategy for the release of development funds under the Public Sector Development Programme (PSDP) for the fiscal year 2026-27, introducing quarterly spending limits and stricter financial controls aimed at strengthening budget discipline and improving the execution of public development projects.
The strategy, issued with immediate effect under the Public Finance Management Act, 2019 and the Financial Management & Powers of Principal Accounting Officers Regulations, 2021, will remain in force until further orders.
Quarterly release schedule
Under the new framework, the Planning, Development and Special Initiatives (PD&SI) Division will authorise development funds from the approved PSDP allocation in phases throughout the fiscal year.
The quarterly release schedule is as follows:
• First Quarter (Q1): 15 per cent of the annual allocation
• Second Quarter (Q2): 20 per cent
• Third Quarter (Q3): 25 per cent
• Fourth Quarter (Q4): 40 per cent
According to the Finance Ministry, the phased release mechanism is intended to improve cash flow management, promote fiscal discipline and ensure smoother implementation of development projects.
Changes subject to Finance Secretary’s approval
The ministry has directed the PD&SI Division to prepare detailed quarterly sector-wise, project-wise and division-wise fund release plans within the approved budget appropriations.
Any proposal to revise the prescribed quarterly release limits will be examined by the Budget Wing of the Finance Division on a case-by-case basis and will require the prior approval of the Finance Secretary.
New responsibilities for Principal Accounting Officers
Under the revised strategy, Principal Accounting Officers (PAOs) will be responsible for ensuring that funds are released only within the limits authorised by the PD&SI Division.
They have also been instructed to:
• Ensure adequate allocations for employee-related expenses under each development project.
• Refrain from transferring funds from employee-related expenditure to non-employee expenditure without prior approval from the PD&SI Division.
• Ensure sufficient allocations for foreign exchange (rupee cover) requirements and communicate them to the PD&SI Division, the Economic Affairs Division and the Finance Division.
Stricter controls on foreign payments
The Finance Ministry has introduced tighter oversight of foreign exchange payments for development projects.
All such payments will require prior approval from the External Finance Wing of the Finance Division.
In addition, project payments must be processed through the pre-audit system, the Assignment Account Procedure or any other payment mechanism notified by the Finance Division. A separate Assignment Account will be maintained for each development project.
The strategy also prohibits direct payments through the State Bank of Pakistan without prior approval from the Finance Secretary in accordance with the Cash Management & Treasury Single Account Rules, 2024.
No Ways and Means clearance required
In a significant procedural change, the ministry has abolished the requirement for obtaining Ways and Means clearance from the Budget Wing before releasing development funds.
However, accounting offices have been instructed not to process payments beyond authorised limits unless prior written approval has been obtained from the Finance Division.
Releases subject to fiscal space
The Finance Ministry has directed all Principal Accounting Officers and accounting offices to ensure strict compliance with the Public Finance Management Act, 2019, relevant financial regulations and instructions issued by the PD&SI Division.
The Development Wing of the Finance Division will oversee implementation of the new fund release strategy and coordinate all matters relating to PSDP financing.
The ministry also clarified that, despite the prescribed quarterly release schedule, all development fund releases during FY2026-27 will remain subject to the availability of fiscal space, allowing the government to adjust spending in line with the country’s overall financial position.