The government has capped the validity of its budgetary funding assurance for multi-year contract projects at a maximum of three fiscal years.
In a new guideline issued on Wednesday, the Ministry of Finance (MoF) stated that government assurances guaranteeing budgetary resources for multi-year projects will remain valid only for the approved project duration, up to three fiscal years. However, this limit may be exceeded for national pride projects or projects whose contract period extends beyond three years.
The guideline clarifies that budgetary funding assurance refers to the government’s commitment to ensure the availability of funds, enabling ministries and agencies to enter into multi-year contractual obligations based on confirmed future budget support.
Under the criteria, a multi-year project is defined as one with specific objectives, timelines, budgets, and cost estimates, consisting of interrelated activities that span more than a single fiscal year. For national pride projects and other eligible multi-year initiatives, the concerned ministry or agency must obtain formal funding assurance from the government.
To secure this assurance, ministries and agencies are required to submit a proposal to the National Planning Commission, including detailed project information, cost estimates, budget subheadings, preliminary and detailed study reports, approved procurement plans, and other necessary documents.
The guideline further states that if the procurement process is not initiated within the fiscal year in which the funding assurance is granted, the assurance will automatically lapse.
For projects financed through foreign assistance, a separate funding assurance is not required to initiate multi-year procurement, provided the process remains within the approved assistance ceiling and complies with the government’s cost-sharing obligations outlined in the agreement. In such cases, the government’s financial liability must be reflected in the medium-term expenditure framework.
Last month, the government also introduced eligibility criteria for multi-year projects, setting a minimum project cost of Rs 500 million. Projects estimated below this threshold will not qualify for multi-year contracts. However, for government building construction and service procurement projects, the minimum cost requirement has been set at Rs 200 million.
