ISLAMABAD: Every penny of the public money shall be reverted to the Treasury Single Account (TSA), within the framework of different authorized accounts of government in the State Bank of Pakistan (SBP) or its nominated agency and cash therein shall be zero balanced, the ministry of finance said.
According to Budget Manual issued this month by the ministry of finance explained that TSA means a banking arrangement for the consolidation of government financial resources in one bank account or multiple bank accounts linked to one main account through which the government transacts all its receipts and payments.
The ministry said that the ultimate objective of introducing the treasury single account arrangement is not only to ensure the efficient cash management but also to minimize the cost of short term borrowing by the federal government.
Withdrawal of public money from the Government Account (SBP) and park, deposit and invest somewhere (in commercial banks) at zero or less competitive rate of return is against the spirit of the provisions under Section 20 of the PFM Act-2019.
The principles defined in the cash management policy approved by the Cabinet can be enlisted as under:
(a) Government shall put in place a framework and timeline to ensure unified structure of the TSA as per law and expand it into the major areas of legal exceptions through amendments in the relevant law/rules. It shall ensure maximum fund availability of cash resources in real time;
(b) the government shall put in place a legal and institution regime to give exceptions from the TSA;
(c) the government shall bring all the public entities into the budgetary, accounting and cash management framework;
(d) the government shall empower the cash manager/s to oversee the cash management operations across the spectrum of budget and its operations;
(e) Cash balance in the TSA shall be maintained at a level sufficient to meet daily operational requirements and a linkage between cash management and debt management shall be institutionalized; and
(f) the government shall ensure full consolidation of cash balances of all government entities (budgetary and extra-budgetary) and devise a mechanism daily zero balancing of the TSA and monthly reporting of complete cash balance of the government within and outside the TSA.
Besides, all the money collected by the public entities as their own revenue and kept in the accounts opened and maintained in the scheduled banks, after specific authorization by the Federal Government, shall be reconciled and reported to the Finance Division by the SBP through its RTGS on daily basis.
The SBP shall devise a regime for availability of this cash for use by the Federal Government and need based disbursement to the relevant public entities.
If any account is opened in a scheduled bank without a specific authorization by the Federal Government, disciplinary proceedings shall be initiated against head of the organization and Principal Accounting Officer concerned under the relevant laws/rules.
The Federal Government shall, however, be empowered to give exception to any organization from the TSA after recommendation by a Committee, which shall be constituted and notified in light of this policy. This committee shall also propose legal amendments for removal of already granted exceptions and inclusion of new exceptions from the TSA, after due deliberation, for approval of the Federal Government.
The detailed rules, under Section 30 of the Public Finance Management Act-2019, are under drafting in the Finance Division and, shall be issued after approval of the Federal Government.
