FG Bars MDAs from Awarding Unfunded Contracts to Curb Abandoned Projects

The Federal Government has directed all Ministries, Departments and Agencies (MDAs) to stop awarding contracts or entering into financial commitments without first obtaining budgetary approval and cash backing, in a renewed effort to strengthen fiscal discipline and reduce abandoned projects.

The directive was contained in a Treasury Circular dated July 31, 2026, signed by the Accountant-General of the Federation, Dr. Shamseldeen Ogunjimi. The circular was addressed to ministers, permanent secretaries, heads of extra-ministerial departments and agencies, accounting officers, and federal pay officers.

According to the Accountant-General, the new operational guidelines were introduced following widespread violations of the Public Procurement Act, 2007, and other financial regulations governing public expenditure.

The circular noted that the measures were intended to reinforce the Federal Government's revised cash management policy and ensure strict compliance with procurement laws and financial regulations.

Under the new directive, no MDA is permitted to issue letters of award, sign contracts, or incur any financial obligation without first obtaining a Warrant or Authority to Incur Expenditure (AIE).

It further stated that the Honourable Minister of Finance and Coordinating Minister of the Economy must approve and release the corresponding Warrant or AIE to the Accountant-General before any contractual commitment can be made.

To guarantee that funds are available before projects commence, MDAs are also required to attach copies of Warrants or AIEs generated through the Government Integrated Financial Management Information System (GIFMIS) when processing contract awards and payments.

The circular warned that financial commitments, including purchase invoices and employee-related obligations, must remain within the limits of available and uncommitted warrant balances.

In addition, the Bureau of Public Procurement (BPP) has been directed to process only applications for "No Objection" certificates that are accompanied by valid Warrants or AIEs.

The Accountant-General reminded accounting officers that awarding or signing contracts without budgetary provision, approval, and cash backing constitutes an offence under the ICPC Act, 2000.

To improve budget implementation, all MDAs have also been instructed to submit annual and quarterly cash plans for their capital projects. The annual cash plan and the first quarterly plan for 2026 were scheduled for submission by July 31, while subsequent quarterly plans must be submitted by the 15th day of the first month of every new quarter.

The Cash Management Technical Committee will continue to assess budget implementation and recommend priority projects to the Federal Cash Management Committee. Meanwhile, accounting officers and directors of finance have been tasked with ensuring prudent cash management within their respective institutions.

The Office of the Accountant-General urged accounting officers, chief executives, directors of finance, internal auditors, and other relevant officials to ensure full compliance with the directive.

The latest measure reinforces the Federal Government's cash management reforms introduced in 2024 and aligns with the Tinubu administration's commitment to fiscal discipline, transparency, and value for money in public spending.

The government expects the directive to reduce abandoned projects, curb the build-up of unpaid contractual liabilities, and ensure that capital projects are executed only when adequate funding has been secured.