Islamabad - Prime Minister Nawaz Sharif has called for minimising the role of finance and planning ministries in the release of funds and directed for automatic quarterly release to ministries and organisations according to their budget allocations, according to an official letter available with The Nation.

The prime minister has observed that with the existing, complicated, cumbersome and time-consuming, system of financial control by the finance and planning ministries, it would be very difficult to achieve the goals of socio-economic development and enhancement of citizens well-being despite the committee and strenuous efforts it is making. He has directed to completely redesign the system by doing away with the existing system of expenditure limits and ways and mean clearances.

The letter addressed by the Prime Minister’s Secretariat to  the Secretary Planning, Development and Reform, has said that while reviewing the impact of the federal government’s financial procedure on the performance of federal ministries and organizations, the prime minister has observed that an elemental requirement of good financial governance is that institutional procedure for the allocation and releases of funds while providing adequate financial accountability, must also facilitate government organizations in the performance of their functions especially in the execution of development works.

The PM has observed that institutional accountability frameworks must produce a culture of transparency, probity and responsibility rather than a complex structure of controls and micromanagement requiring sanctions and clearances at every step that impedes government agencies in the conduct of even routine business.

The prime minister has desired that the two ministries should submit by May 1 a joint proposal for reforming the current system of financial control, which must include, inter alia, the following: One-line current and development budgets for federal ministries and organizations; automatic  quarterly release to ministries and organizations based on their budget allocations, and discontinuing both with the existing system of expenditure limits and Ways and Mean clearances; discontinuing the systems of Financial and Deputy Financial Advisors; making Principal Accounting Officers fully responsible and accountable for their decisions in the case of financial control; making ministries fully responsible for their development projects and their financing timelines within their development budgets; limiting the functional domains of the Ministry of Planning Development and Reform to development planning macro level, allocation of the development budget to federal ministries and organizations, granting approvals for development projects through the CDWP and other existing development forums,  and monitoring of development works; complete automation of financial releases, permissions and sanctions, a bare minimum of which will remain after the one-line budget system has been introduced.

Keeping in mind unforeseen difficulties that may arise in the implementation of the new financial system, the prime minister has desired a phased approach with the direction of introducing the system in the first phase in the following divisions in the budget 2017-18. They include the Water and Power, Petroleum and Natural Resources, communication- to the extent of NHA, Interior to the extent of law and order and capacity building, cabinet- to the extent of infrastructure development and SDGs and National Health services, Regulations and Coordination.

Meanwhile, official sources said that the step is purely taken on a political basis, as this is the final year of the government and it wanted that some ministries should have swift availability of funds without any interruption from the planning and finance.

Usually, the planning ministry issues the authorization, asking for the spending details followed by the release of funds by the ministry of finance.

“We have been very clearly told by the government that on July 1, which is the first day of the new financial year, 20 percent PSDP should be released to the seven ministries and divisions without their prior demand,” the source added.

Now the ministry of finance and ministry of planning will have a minimum role in the release of funds to the seven ministries and divisions, the source said.