ISLAMABAD: Serious structural flaws exist in the system regarding the management of public money, Secretary Finance Arif Khan acknowledged on Wednesday during a meeting of the Public Accounts Committee (PAC).

The secretary finance informed the committee that out of the Rs1,001 billion development budget allocation, only Rs750bn would be spent “due to limited capacity of the government machinery.”

Responding to the audit objections of Ministry of Finance, the secretary said that around Rs1.8 trillion belonging to various ministries, state institutions, etc was parked in banks.

“The banks were using this money for lending to the government and earning significant markup,” Mr Khan said, adding, “There are several structural flaws in the system that needed rectification.”

The PAC was read another audit objection where the finance ministry transferred an unutilised amount of Rs7.09bn in other accounts in the State Bank in 2015-16 which remains undeclared.

The finance ministry official did not have a solid response to the query. However, the officials of Auditor General Pakistan (AGP) pointed out that the money should have been declared as lapse amount and approval of the parliament should have been taken for its utilisation in the next year.

Serious concerns were expressed by parliamentarians including PAC Chairman Syed Khursheed Shah. In response, the secretary finance said, “It is incorrect. We must look into such cases and correct it but many wrong doings have become a habit.”

The meeting also witnessed a serious debate between the officials of AGP, State Bank and PAC members over an audit objection related to issuance of Rs15bn loan to Bank Islami at low rates.

Deputy governor SBP responded that injections are made to the banks to help their liquidity issues. In response, Syed Naveed Qamar asked that this liquidity support was made to Bank Islami after it took over KASB Bank at Rs1,000 only.

The query created furore among the PAC members. The AGP officials further said that another liquidity assistance of Rs5bn was made to Bank Islami at easy terms.

The PAC was informed that there was case against the State Bank in NAB while KASB Bank has won the case in Sindh High Court against the decision of the banking sector regulator.

PAC members including Naveed Qamar and Sherry Rehman asked if any such favour was granted to any other bank in the recent past.

Published in Dawn, April 26th, 2018