The Finance Division has announced the funds release strategy for the development and recurrent budgets for FY2026-27, stating that all budgetary releases will remain subject to the availability of fiscal space.

Issued through an official memorandum, the strategy has been implemented under the provisions of the Public Finance Management Act, 2019, and the Financial Management & Powers of Principal Accounting Officers (PAOs) Regulations, 2021.

Under the approved framework, development funds under the Public Sector Development Programme (PSDP) will be released in phases throughout the fiscal year. The Planning, Development and Special Initiatives (PD&SI) Division will authorize 15% of the annual allocation in the first quarter, 20% in the second quarter, 25% in the third quarter, and the remaining 40% in the fourth quarter.

The Finance Division directed the PD&SI Division to prepare detailed quarterly release plans for sectors, projects, and ministries within the approved PSDP allocation. Any request to revise the quarterly release limits will require prior approval from the Finance Secretary and will be reviewed on a case-by-case basis.

Principal Accounting Officers will be responsible for releasing funds to approved projects in line with the allocations authorized by the PD&SI Division. They have also been instructed to ensure adequate availability of funds for employee-related expenses under each development project.

The strategy further prohibits the reallocation of employee-related expenditures to non-employee spending without the prior approval of the PD&SI Division, reinforcing tighter financial controls over project implementation.

To facilitate externally financed projects, ministries have been directed to ensure sufficient budgetary allocations for foreign exchange requirements and coordinate these with the PD&SI Division, Economic Affairs Division, and Finance Division. Any foreign currency payments will require prior clearance from the External Finance Wing of the Finance Division.

The memorandum also states that all project payments will be processed through the prescribed financial procedures, including the pre-audit system or the Assignment Account mechanism. Additionally, a separate Assignment Account will be maintained for each development project to strengthen financial transparency and accountability.

The phased release strategy is intended to improve budget management, ensure disciplined public spending, and align development expenditures with the government's overall fiscal position during FY2026-27.