Thursday, 1 December 2022

IMF demands closure of Bank Accounts of public sector entities

The International Monetary Fund (IMF) has placed a condition on Pakistan to close all the bank accounts maintained by public sector entities and the defence ministry in commercial banks. The money should be transferred to the central bank’s account.

The purpose of demand is to brought back hundreds of billions of amounts under the government’s control that are currently hold with the commercial banks in violation of various instructions by the finance ministry.

According to The Express Tribune one of the reasons behind a delay in reaching a staff-level agreement was the IMF’s insistence to roll out the treasury single account –II system within this fiscal year.

The finance ministry sources said that there were roughly 50,000 bank accounts maintained by the defence ministry, the armed forces and public sector entities including the Oil and Gas Development Company Limited (OGDCL) and National Highway Authority (NHA) that have to be closed under the second phase of the financial management reforms. Pakistan wants one more year to close these accounts, but the IMF is not willing to extend the date.

The sources said the government had offered to close these accounts by February next year. Finance Adviser Shaukat Tarin did not reply to the question whether or not Pakistan had agreed to the February 2022 deadline. The finance ministry spokesman also did not respond until the filing of this story.

According to news published in “The Express Tribune”, in the first phase, the commercial bank accounts of the government ministries and attached departments had to be closed by May 2021. However, only 4,500 of the 6,000 of these accounts could be closed and a balance of about Rs5 billion was transferred to the Federal Consolidated Fund. Even some major accounts maintained by the Motorway Police, Anti-Narcotics Force, the Customs Department and the Petroleum Division could not be closed by May this year.

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