Islamabad, June 17:Pakistan’s federal government has directed all commercial banks to immediately close the accounts of public sector entities having zero balances, Dawn reported on Friday.
The directive, which was communicated through the State Bank of Pakistan (SBP), followed a related May 18 memorandum in which the Government ordered all ministries, divisions, the Governments of four provinces, Azad Kashmir and Gilgit-Baltistan and their public sector enterprises to immediately surrender their working capital and surplus funds kept for investment into a single treasury account of the federation.
All these entities, including the registrars of the Supreme Court and high courts, the Senate, the National Assembly and the military accounts, were directed last month by the finance ministry that all notifications since July 2003 enabling such entities to keep surplus funds and working capital in their own accounts had been withdrawn with immediate effect.
Further, the approval accorded to any public sector entities with respect to maintaining working balance is also hereby withdrawn, the May 18 notification said.
In the latest notification to banks issued on June 11, the finance ministry desired that the process started in 2020 following the passage of the Public Finance Management Act 2019 had also put in place a procedure in consultation with the SBP and the international lending agencies.
With a view to consolidating the cash balances of the federal Government, the finance division has collected information of all the accounts maintained by federal Government entities through the SBP. After analysis of this information, it has been established that thousands of the zero balance accounts (ZBA) in scheduled commercial banks are inoperative and zero balance accounts exist.
The Finance Minister said that Article 78 of the Constitution required that all revenues, loan receipts and all other moneys received by or on behalf of the government of Pakistan were either part of the federal consolidated fund (FCF) or the public account of the federation (PAF).
The cash balances of both FCF and PAF are maintained in central account No.1 (non-food) at the SBP.
Under the Public Finance Management (PFM) Act of 2019, the operations of the FCF and PAF vest in the finance division. The law also required under Section 23(2) that no authority shall transfer public moneys for investment or deposit from a government account to another bank account without federal Government approval.
Subsequently, the Government also notified Cash Management and Treasury Single Account Policy 2019-29 and Cash Management and Treasury Single Account Rules 2020 under which no Government office shall open, operate or maintain any bank account for any purpose except in accordance with the PFM Act and that any approval granted by the finance division prior to commencement of these rules, for the opening of bank accounts in scheduled banks by Government offices stand revoked on commencement of these rules.
Under such rules, the accounts already opened had to be closed and balances, if any, transferred to the federal consolidated fund. (UNI)
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