Pakistan should shift deposits of Rs2,900bn into Federal Consolidated Fund: IMF

The International Monetary Fund (IMF) has expressed serious concerns over Pakistan's failure in operationalising the Treasury Single Account (TSA-1) under which Islamabad had to close down the accounts of federal and provincial governments into private commercial banks with whopping deposits of Rs2,900 billion.

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The IMF hinted at bringing attached autonomous bodies and entities, including those belonging to the Ministry of Defense and the armed forces, as part of the structural benchmark of $6 billion Extended Fund Facility (EFF).

Under the Treasury Single Account (TSA)-1, Pakistan already agreed with the IMF to withdraw Rs2,900 billion from commercial banks and shift it into the Federal Consolidated Fund (FCA) known as the account number of the federal government with the State Bank of Pakistan.

However, the all-powerful ministries, including the Ministry of Defense and others, had not yet accomplished such assigned tasks within the stipulated time-frame.

Now the IMF is moving one step ahead to make the TSA-2 as part of a structural benchmark under which all attached autonomous departments, including those affiliated with the Ministry of Defence and armed forces, would also be required to shift their deposits into federal consolidated fund.

The amount of Rs1,665 billion of different federal ministries and divisions are lying into commercial banks’ accounts while over Rs1,100 billion of provincial governments is also deposited into private commercial banks.

Now the IMF, under TSA-2, is asking the attached departments of ministries/divisions such as NHA, OGDC, FWO, NLC, SCO and others to follow the same rules and shift their deposits into consolidated accounts.

Commercial banks are earning huge profits on deposited money of Rs2,900 billion of federal and provincial governments as there is spread of 4 to 5% because they were investing into T-bills and charging more from the government, so conservative estimates suggest that the government was losing Rs150 billion on per annum basis because of this mismanagement.