Faced by irregularities running into billions of dollars in the use of government funds, China is to adopt financial scrutiny methods, which have been partly modeled on the budgetary supervision system operated by the US Congress, a senior national lawmaker revealed Thursday.

Lu Baifu, a newly elected member of the Finance and Economic Committee (FEC) of the 10th National People's Congress (NPC), confirmed this in an exclusive interview with China Daily.

Government auditors examined some 104,000 government institutions in the first 11 months last year. And they found various problems amounting to 205 billion yuan (US$24.7 billion), according to statistics from the National Audit Office.

Lu said China's top legislature has vowed to intensify supervision work to curb a rapid expansion in suspect government expenditure and rampant financial corruption.

He said his committee will strengthen its examination and supervision on the implementation of national budgets and budgetary management in all central government bodies and for major projects.

"Strengthening the NPC's economic supervision role is a vital and significant job for the country's supreme power organ," said Lu, who has been an FEC member of the Ninth NPC for the past five years.

As one of the NPC's 10 subordinate committees, the FEC is in charge of discussing economy and finance-related affairs and passing relevant laws when the full parliament is not in session.

During its five-year term, the lawmaker said, the Ninth NPC made outstanding progress in improving the examination and approval of central and local budgets as well as budgetary management in central government bodies.

The Standing Committee of the Ninth NPC enacted two laws in this field and required a total of 26 central government departments to submit their departmental budgets for examination, according to Lu, who is also deputy director of the China Academy for Financial Studies.

Despite these achievements, he said, more has to be done to address some problems that have long been plaguing the drafting and implementation of both central and local budgets.

First of all, the FEC has little say in examining and approving extra-budgetary expenditures, which usually total more than 100 billion yuan (US$12.09 billion) each year, Lu said.

The Ministry of Finance usually first earmarks the extra-budgetary expenditures without notification in advance and then lets the FEC rubber stamp its decisions.

Lu said the drafts of central, local and departmental budgets give only rough outlines and lack details, creating many loopholes for arbitrary outlays and abuse in use of public funds.

What's worse, the FEC member said, is that, the NPC has failed to impose effective management over non extra-budgetary spending at both central and local levels.

Financial experts estimate this stands at half of budgeted expenditures for the whole country each year.

In 2002, the budgeted expenditure for the whole country was 2.11 trillion yuan (US$255 billion) and the figure for 2003 is 2.3 trillion yuan (US$278 billion).

Lu said the FEC is planning to order the Ministry of Finance to submit quarterly budget reports in each financial year instead of giving only a final report at the end of the financial year.

Meanwhile, all central government organizations will be required to compile their departmental budgets in detail so that their total expenditures can be controlled more effectively, he said.

The FEC will also organize special studies of draft budgets for huge national projects such as the Three Gorges Project, West-East Gas Pipeline Project and South-North Water Diversion Project. Budgetary management of these projects will be strengthened.

"Through these measures, we hope to gradually improve the efficiency of the country's financial budgetary work and better standardize the expenditures in central government departments," Lu said.

"In the meantime, runaway corrupt practices resulting from poor budgetary management systems will also be prevented."

(China Daily March 15, 2003)