FG moves to end contracts award without funds

….Targets smarter capital spending
Barbara Bako, Abuja.

The Federal Government has declared a new era of fiscal discipline in capital project execution, warning Ministries, Departments, and Agencies (MDAs) against awarding contracts without proof of available funds.

Finance Minister Wale Edun, speaking at the Office of the Accountant General of the Federation’s (OAGF) stakeholders’ engagement on the 2025 capital budget on Wednesday in Abuja, said warrants and Authorities to Incur Expenditure (AIEs) will now be issued before any legal commitment is made.

“For the avoidance of doubt, no letter of award, contract signing, or financial obligation should be entered into unless corresponding warrants and AIEs covering the full or committed portion have been duly released,” Edun said.

“We spend what we have earned… funds must be channelled diligently into investment in equipment and facilities that boost productivity, create jobs, and lift millions out of poverty,” he added.

Edun disclosed that distortions costing the economy 5% of GDP have been removed, boosting revenue inflows into the Federation Account.

However, he stressed that the government’s growth target is 7% annually, double the population growth rate, to achieve rapid and inclusive development.

Budget Office Director-General, Dr. Tanimu Yakubu linked the slow capital budget performance to revenue shortfalls in early 2025, citing provisions of the Petroleum Industry Act (PIA) 2022 which diverted significant oil earnings to the Nigerian National Petroleum Company Limited (NNPC) and the Frontier Exploration Fund.

Read also:Customs, FIRS, NSW partner to boost trade reform

“We have initiated moves to amend the Act through the National Assembly to recover lost revenue,” he said, adding that oil price volatility and underproduction further constrained spending.

Accountant General of the Federation, Mr. Shamsuldeen Ogunjimi assured MDAs and contractors that genuine contract obligations already captured on the Government Integrated Financial Management Information System (GIFMIS) would be honoured.

Ogunjimi “We want to restore confidence so that holding a government contract letter means something again,” she said. “If it is on GIFMIS, it is a government liability and we will fund it.”

Director of Funds at the OAGF, Mr Steve Ehikhamenor, urged MDAs to strictly follow budget prioritisation guidelines to match scarce resources with the most critical projects.

“Inside priority, there is another priority. Our goal is to eliminate delays between budget approval and implementation,” he said.

The engagement, attended by key budget and procurement stakeholders, is part of the government’s push to align spending with revenue realities, curb waste, and deliver capital projects on time.