FG bans MDAs from awarding contracts without cash backing

The Federal Government has introduced stricter controls over the implementation of the 2026 capital budget, directing Ministries, Departments and Agencies (MDAs) not to award contracts, sign agreements or incur financial obligations without approved expenditure warrants and cash backing.

The directive, contained in a Federal Treasury Circular dated July 31, 2026, is expected to tighten fiscal discipline, curb unfunded contract awards and strengthen cash management across the Federal Government.

Signed by the Accountant-General of the Federation, Shamseldeen Ogunjimi, the circular was addressed to ministers, permanent secretaries, heads of extra-ministerial agencies, service chiefs, the Governor of the Central Bank of Nigeria, the Clerk of the National Assembly, the Chief Registrar of the Supreme Court, heads of diplomatic missions and other federal institutions.

What the circular says

According to the circular, MDAs can no longer issue letters of award, execute contracts or enter into financial commitments unless they have received the relevant Warrant or Authority to Incur Expenditure (AIE) covering the value of the contract or the portion to be committed.

The warrant must also have been released by the Minister of Finance and Coordinating Minister of the Economy to the Accountant-General of the Federation.

The directive is part of new operational guidelines for implementing the 2026 capital budget.

• “In compliance with provisions of the Financial Regulation 318 & 415 respectively, no expenditure shall be incurred except on the authority of a Warrant/AIE (including employee payables),” the circular stated.
• It added, “Accordingly, no MDA shall issue letters of award, sign contracts, or enter into any financial obligations unless the corresponding Warrant/AIE covering the full or committed portion of the contract sum has been duly released.”

The government also instructed MDAs to download and attach copies of their Warrants or AIEs generated from the Government Integrated Financial Management Information System (GIFMIS) as evidence that funds are available before contracts are awarded or payments are processed.

The circular further directed that financial commitments, including purchase invoices and employee payables, must be restricted to available uncommitted warrant balances.

• “At no time should financial commitments exceed the amount of Warrants/AIEs available,” it stated.

In another measure aimed at tightening procurement controls, the Bureau of Public Procurement (BPP) was directed to process only requests for Certificates of No Objection that are backed by valid Warrants or Authorities to Incur Expenditure.

The circular also warned accounting officers that awarding or signing contracts without budgetary provision, approval and cash backing constitutes an offence under the ICPC Act 2000.

• “Accounting Officers are invited to note that it is an offence under ICPC Act 2000, to award or sign any contract without budgetary provision, approval and cash backing,” the circular read.

MDAs to prioritise projects

Beyond procurement controls, the Federal Government directed all MDAs to submit annual cash plans for their 2026 capital budgets to the Office of the Accountant-General of the Federation.

• According to the circular, the annual cash plans, commencing from July 1, 2026, were to be submitted in both hard and soft copies on or before July 31, 2026, alongside the first quarterly cash plan.
• Subsequent quarterly cash plans are to be submitted on or before the 15th day of the first month of every new quarter.
• The circular also instructed MDAs to prioritise projects and programmes in line with the Federal Government’s policy objectives.

The Office of the Accountant-General said the new measures became necessary to strengthen compliance with an earlier Treasury Circular on the revised cash management and bottom-up cash planning framework.

It noted that the latest directive followed observed cases of non-compliance with the Public Procurement Act 2007 and other extant laws and regulations.

• “The following operational guidelines for the implementation of the 2026 capital budgets are hereby issued,” the circular stated.

The Accountant-General further directed accounting officers, directors of finance and accounts, and heads of internal audit to ensure effective cash management by prioritising projects based on available Warrants and Authorities to Incur Expenditure rather than approved budget allocations alone.

Meanwhile, the Cash Management Technical Committee will continue reviewing budget implementation plans and advising the Federal Cash Management Committee on project priorities in line with government objectives.

What you should know

In April 2026, President Bola Tinubu signed the 2026 Appropriation Bill into law, approving a total expenditure of N68.32 trillion for the fiscal year.

The President also assented to a separate bill extending the implementation period of the capital component of the 2025 budget from March 31, 2026, to June 30, 2026.

• Nairametrics also reported that the Federal Government increased its planned borrowing for 2026 to N29.20 trillion following an expansion in the proposed budget size and fiscal deficit, according to official documents reviewed by Nairametrics.
• The new borrowing figure was an increase of N11.31 trillion compared to the earlier projection of N17.89 trillion contained in the 2026 Abridged Budget Call Circular issued in December 2025.

The revised borrowing plan was an increase in the fiscal deficit, now estimated at N31.46 trillion. Total government expenditure is projected at N68.32 trillion, while revenues are expected to reach N36.87 trillion.