ISLAMABAD, Aug 13: The government has decided to tighten fiscal control over public spending – both development programme and current expenditure -- through sweeping powers to the ministry of finance to overcome critical financial crunch faced by the economy.

As a result, the government has curtailed powers of the planning commission to allow release of funds for various development projects being carried out by the line ministries and autonomous organisations, informed sources told Dawn.

This is necessary “to ensure implementation of economy measures in letter and spirit in public spending,” said a letter issued by the finance ministry to all line ministries and their principal accounting officers.

Sources said all the ministries and divisions have been told that they would need to get their cash plans approved by the financial adviser organisation of the finance ministry before the release of funds as part of government decisions on the “issues of economy measures and efficient financial management in public sector.”

Until now, the line ministries, divisions and departments used to submit their cash and work plans to the planning commission. On the basis of these demands, the planning commission used to direct the finance ministry to release funds to the line ministries.

The ministries have now been advised that financial adviser organisation would examine the reasonability of cash plan with reference to work plan during the process of approving a cash plan for development works.

The financial adviser organisation has been directed to “critically examine the proposals for release of funds in order to ensure the adequate requirement of line ministries/divisions and their attached departments. This will be applicable to development as well as current expenditure.”

The financial adviser organisation has also been instructed to prepare a list of demands for release of development funds on a given format and provide it to the finance ministry’s expenditure wing on a weekly basis i.e. every Friday.

The finance ministry will then consolidate the overall demands for release of development funds and submit it for approval by the secretary and minister every Saturday.

Likewise, endorsement of sanctions by the financial adviser organisation for release of funds during first quarter of financial year 2008-09 will be mandatory.

The organisation has been asked ‘to ensure that government receipts/revenues are reasonably forecasted, efficiently collected and properly accounted for’.

The financial advisers will also see that receipts are properly handled and adequate financial management exists in the line ministries under the government’s approved system of financial control and budgeting.

The financial adviser organisation has been asked to collect data on cash balances with details of bank accounts and available investment of the ministries, divisions and their attached departments on a monthly basis.

In case the line ministries fail to “provide details of their bank accounts and available investments by 10th of each month, their releases for the next month will be stopped till such time they provide requisite data,” said an order issued to the ministries.

Another order issued to the ministries says that “release of funds for the first quarter of 2008-09 for development projects has been restricted to the maximum of 15 per cent of the funds allocated for them in PSDP 2008-09.”