Finance Ministry Orders Early Surrender of Unspent Funds Ahead of Budget Finalisation

ISLAMABAD: The Ministry of Finance Pakistan has directed all ministries, divisions, and public sector entities to surrender unutilised funds within 10 days, accelerating the process to finalise revised estimates for FY2025-26 and prepare the upcoming FY2026-27 budget.

In an official communication, the Finance Division instructed Principal Accounting Officers (PAOs) to submit all anticipated savings by May 10 — nearly three weeks earlier than the usual deadline mandated under the Public Finance Management Act 2019, which sets May 31 as the cut-off date.

The directive covers all four major heads of expenditure, including civil government operations (both employee-related and non-employee expenses), grants, subsidies, and development spending under the Public Sector Development Programme (PSDP).

Officials said the move follows instructions from the Public Accounts Committee Pakistan (PAC), aimed at improving fiscal discipline and ensuring that idle funds are reallocated efficiently where needed.

The decision comes amid fiscal pressures, with the PSDP already reduced by Rs173 billion — around 20% of its allocation — to divert resources toward fuel subsidies in response to rising global oil prices linked to geopolitical tensions.

Despite the cut, utilisation of development funds has remained uneven. Data from the Planning Commission of Pakistan shows that only about 41.5% of the Rs1 trillion PSDP allocation was spent during July–March of the current fiscal year, slightly higher than last year’s 36.4%.

However, spending under parliamentarians’ schemes — particularly the Sustainable Development Goals Achievement Programme (SAP) — has been significantly higher, with around 70% of allocated funds utilised within a short period of four months.

Overall, ministries sanctioned Rs589 billion by March 31, of which approximately Rs415 billion (45.6%) had been spent.

Under the current release mechanism, 60% of the annual development budget should have been disbursed by the end of the third quarter, but actual utilisation has lagged behind expectations.

The Finance Ministry emphasised that early surrender of funds would help streamline budget planning and allow better allocation of resources in the upcoming fiscal year, while the PAC has also called for greater accountability from departments seeking additional funding.