Ministry of Finance in a bid to do away with the remnants of British Raj, will delegate financial powers to the Principal Accounts Officers (PAOs) the Public Accounts Committee (PAC) was informed on Tuesday.
Secretary Finance Tanvir Ali Agha told the PAC that ministry's relations with its clients who happen to be various government departments, are based on mistrust and PAO's powers are very limited.
"This is reminiscent of British era and we want them fully empowered so that they can take independent decisions and are held accountable for that," Agha told the PAC during the appropriation of ministry's accounts for the year 2000-01.
"From next year we have made a scheme for chief accounts officers so that they can help the ministry in financial matters."
"The chief accounts officers and PACs together will update and modernise the financial rules and regulations so that (financial) decisions are taken quickly," he said.
Chairman PAC Malik Allah Yar Khan appreciated the ministry's plan and observed that due to some shortcomings on part of PAOs, internal financial management was not appropriate.
"Even the internal auditors of various departments were not doing their job with great responsibility which is reflected in the PAC's meetings," Malik Allah Yar said.
"If the internal auditors do their work properly, many of the faults in audit paras would be removed."
In response to a question from PAC member Qurban Ali Shah that Sindh had re-paid its loan at a very high interest rate which it borrowed from the centre, Agha said the centre lends on the rate at which it borrows.
Qurban Ali also said that under the constitution, the financial matters should be decentralised and provinces made independent.
Agha said he favours that the centre should share finances with the provinces.
In reply to a question about the huge loans that are written off by the National Bank, Agha said the decision in this regard is taken by the bank's board of governors.
"It is an independent decision in which the government does not interfere," he added. Maulana Abdul Ghafoor Haideri asked the finance secretary about the steps being taken by the government to switch over to interest free banking to which Agha replied that in domestic market the Islamic banks are being encouraged.
He said a number of such banks have started operating in the country which are doing Islamic and interest free banking.
He agreed with the observation of Qurban Ali that banks profits have ballooned over the last six years while the depositors are not getting a fair return for their money.
"The point raised is very valid. But only State Bank can interfere in this matter which regulates banks' working and not the government of Pakistan."
He said during any emergency in the country, the ministry of finance is approached for extra funds and this year so far it has released Rs 25 billion for earthquake rehabilitation and Rs 65 billion more will be given by the year end.
The finance secretary said the budget allocation in GDP is gradually coming down and over the last three years it has almost halved.
He said this year's total GDP was Rs 7,562 billion, most of which is being used for debt retirement.
"We religiously ensure debt retirement and even the money raised from Euro Bonds is also being used for the purpose."
The main purpose of floating Euro Bonds, Agha added, was not to earn money rather improve Pakistan's standing internationally as a destination for foreign direct investment (FDI).
He said due to increasing petroleum prices in the international markets, against the estimated spending of some three billion dollars on its import, that figure now stand at around seven billion dollars.
He said last week the government paid Rs 8 billion to oil companies as price differential.