The Finance Ministry has introduced new Cash Management and Treasury Single Account Rules to reduce its debt servicing cost by accessing trillions of rupees held by various ministries and departments in commercial bank accounts.
Government offices and public companies will now be obligated to provide a complete list of their bank accounts to the Finance Division on a quarterly basis.
The first phase will focus on capturing details and funds parked in non-interest private (current) bank accounts of government departments and may extend to other account types in the future.
The State Bank of Pakistan (SBP) will cash out government accounts in commercial banks at the end of each working day. This cash will then be made available to commercial banks the following day.
These measures align with an IMF arrangement that Pakistan maintains cash buffers equal to 1 percent of GDP or over Rs. 1 trillion by borrowing from commercial banks.
The Finance Division has instructed ministries to provide quarterly revenue and expenditure forecasts. It also directed government offices to operate bank accounts in compliance with the Public Finance Management Act.
Meanwhile, all banks are required to provide information on accounts maintained by government entities. The Finance Division will review and close non-essential bank accounts opened by government entities.
Rules
- These rules would ensure the timely availability of funds for settling authorized expenditures and the Budget Wing and Debt Management Office shall project an estimate of cash buffer requirement regularly
- Finance Division may, in coordination with the State Bank of Pakistan, utilize surplus funds, if any, to retire public debt
- By the 56th day of each month, Accountant General of Pakistan Revenues to provide revenue and expenditure data to secretaries of all divisions for review
- Secretaries of all divisions are to provide a three-month forecast of revenue and expenditure to the Finance Division by the 206th day of the month following the end of each quarter
- Debt Management Office to prepare quarterly projections of debt servicing, principal and interest
- Finance Division to prepare cash forecast reports every month based on data provided by divisions and the Debt Management Office.
