NATIONAL INSTITUTE OF MANAGEMENT

LAHORE

Simulation Exercise – I

“Federal Finance Minister’s Committee on

Streamlining the Implementation of Single Treasury
Account System for Prudent Cash Management”

RG-7 Composition

Sr. No. Name Group/Service

1. Mr. Tajammal Abbas Rana PMS(Ex-PCS)
2. Mr. Muhammad Suhail Khawaja PAS
3. Ms. Farhat Ali PCS
4. Mr. Shahid Sattar IRS
5. Mr. Saad Farooqi PA&AS
6. Mr. Munib-ur-Rehman PMS(Ex-PSS)

Faculty Advisor: Ms. Sameena Fayyaz

Date: June 09, 2023
 Contents
List of Abbreviations............................................................................................................i

Executive Summary.............................................................................................................ii

Section – I:...........................................................................................................................1

Introduction..........................................................................................................................1

1.1 Statement of the Problem...................................................................................2

1.2 Literature Review...............................................................................................2

1.3 Terms of Reference............................................................................................3

Section – II: Research Methodology...................................................................................3

Section-III: Situational Analysis..........................................................................................4

3.1 Historical evolution of TSA.......................................................................................4

3.2 Policy & Institutional Arrangement ......................................................................5

3.3 TSA implementation at Provincial levels..............................................................6

3.4 Impact of TSA on Cash flow in Pakistan...............................................................7

3.5 Analysis of Entities outside the ambit of TSA:......................................................7

3.6 Analysis based on Focused group discussions, zoom meetings and Open ended/
Semi-structured interviews........................................................................................................11

3.7 PESTL Analysis...................................................................................................13

3.8 Stakeholders’ Analysis.........................................................................................13

3.9 International Best Practices..................................................................................14

3.10 Contextualization and Lessons Learnt.............................................................14

Section-IV:.........................................................................................................................15

Challenges..........................................................................................................................15

4.1 Legal challenges:..................................................................................................15

 4.2 Administrative Challenges:..................................................................................16

4.3 Technological Challenges....................................................................................16

4.4 Conclusion........................................................................................................16

Section-V: Way Forward...................................................................................................17

5.1 Recommendations................................................................................................17

5.2 Strategy Formulation...........................................................................................18

5.2.1 Vision..............................................................................................................18

5.2.2 Mission.............................................................................................................18

5.2.3 Action Plan.......................................................................................................19

5.3 Contingency Plan.............................................................................................19

References..........................................................................................................................20
 List of Tables & Figures

Table 1: Various government entities in different banks.....................................................9

Table 2: Federal Divisions/Entities with 70 percent of the deposits.................................11

Table 3: Results of open ended/ semi structured interviews.............................................13

Table 4: PESTL Analysis..................................................................................................14

Table 5: Stakeholders’ Analysis........................................................................................15

Table 7: Lessons Learnt.....................................................................................................16

Figure 1: Centralized Payment by the Treasury from the TSA...........................................6

Figure 2: Comparison of number of accounts holders and deposits..................................10

Figure 3: Analysis of Accounts with No returns to entities...............................................11

Figure 4: Share of commercial banks in current account deposits....................................11

 List of Abbreviations

AIOU Allama Iqbal Open University

CGA Controller General of Accounts
EOBI Employees Old Age Benefit Institution
FBR Federal Board of Revenue
HEC Higher Education Commission
IMF International Monetary Fund
KPIs Key Performance Indicators
MDAS Ministries, Divisions, Attached Departments, Subordinate
Offices
MoF Ministry of Finance
NAB National Accountability Bureau
NADRA National Database & Registration Authority
NEPRA National Electric Power Regulatory Authority
NHA National Highway Authority
NH&MP National Highway & Motorway Police
PCB Pakistan Cricket Board
PEC Pakistan Engineering Council
PD&SI Ministry of Planning, Development & Special Initiatives
PM&DC Pakistan Medical & Dental Council
SECP Securities and Exchange Commission of Pakistan
SBP State Bank of Pakistan
SOEs State Owned Enterprises
SUPARCO Pakistan Space & Upper Atmosphere Research Commission
TSA Treasury Single Account
UET University of Engineering & Technology
VU Virtual University
WWF Workers Welfare Fund

i
 Executive Summary

There is no effective aggregate control of cash and despite the availability of huge cash in
various accounts of commercial banks related to different entities of the government resort to
borrowing cash by paying additional interest charges. The introduction of Treasury Single
Account (TSA) in Pakistan through promulgation of Public Finance Management (PFM) Act,
2019 has paved the way of consolidation of cash resources intended at optimizing government
cash management. Despite lapse of three years, the progress in implementation of reforms and
accomplishment of task has remained slow due to legal, administrative and technological issues.
Hence, there is a need to analyze the situation, identify gaps and recommend possible solutions.

It is pertinent to mention here that a huge amount of government cash is taken out from
the government accounts by different organizations and departments in the name of statutory,
strategic, operational and commercial requirements and placed in the public and private accounts
maintained in the commercial banks whereas the Government has to raise debt from the
scheduled banks to ensure its cash flows. Furthermore, government tends to borrow and keep
requisite amounts as a cash buffer. Government, thus has to pay high amounts of interest on
borrowed amount.

With the implementation of TSA, fragmented accounts have started to move towards
Treasury Single Account slowly initially with the closure of some bank accounts at the federal
level. However, cash of only Rs.5 billion came into federal consolidated fund with closure of
approximately 4500 accounts through these measures. (Sajjad Azhar, 2023). However, the
accounts belonging to Ministry of Defense and various autonomous bodies remained out of the
purview due to certain legal issues and operational issues.

On the basis of Situational Analysis, PESTL Analysis and Stakeholders’ Analysis legal,
administrative and technical challenges have been identified and key recommendations have
been proposed. Establishing an online portal at MoF, removing legal bottlenecks and allowing
entities to have cash balances with disbursement limit options will be helpful in combating the
current challenges. The Action Plan has also been proposed for implementation of key
recommendations.

ii
 Section – I:

Introduction

Pakistan is facing serious economic challenges due to fragmented banking arrangements

and poor control over cash balances. The ineffective cash management creates major hindrances
in appropriate and effective cash flow. Different ministries, divisions, attached departments and
subordinate offices are maintaining multiple accounts in commercial banks with an enormous
amount of cash. Furthermore, there are numerous autonomous organizations, local governments
and government owned companies that also have multiple accounts with considerable deposits
lying unutilized in commercial banks. Despite availability of huge cash in multifarious accounts
of commercial banks related to different entities, the government resorts to borrow cash on
additional interest charges. The introduction of Treasury Single Account (TSA) in Pakistan
through promulgation of Public Finance Management (PFM) Act, 2019 was a major initiative to
consolidate cash resources and optimize government cash management system. It is a step
towards effective monetary and budgetary control. It reduces transaction costs, delay in the
remitting government revenue. This unified arrangement enhances the fungibility of the
government’s cash resources because no agency remains outside the ambit of the treasury.
Moreover, all government cash, budgetary or extra- budgetary is accounted for. The TSA
reforms are being implemented to some extent at federal level, however the progress is
considerably slow as still 90,119 accounts of federal government entities holding Rs. 1.991
trillion are out of the purview of TSA. (Secretary, 2023) There are several federal entities still
out of the ambit of TSA due to certain legal, administrative, and technological issues. The
provinces have their respective legislative frameworks but implementation of reforms have
remained slow there as well. The swift implementation of TSA would be beneficial for the
government of Pakistan in terms of improved debt and cash flow forecasting and management.

1
1.1 Statement of the Problem

Under Cash Management and Single Treasury Rules 2020, federal government
ministries, divisions, attached departments and subordinate offices were directed to close their
bank accounts with commercial banks /financial institutions and transfer the balance funds to the
Treasury Single Account (TSA) i.e., Central Account no. 1 (non-food), with the State Bank of
Pakistan. Despite lapse of three years, the progress in implementation of reforms and
accomplishment of task has remained slow as 90,119 federal accounts are still out of ambit of
TSA. The purpose of research is to identify what are the gaps and how to implement TSA
effectively and efficiently.

1.2 Literature Review

The PFM Act, 2019 presents the mechanism to establish a Treasury Single Account for a
unified government bank account structure. Cash Management and Treasury Single Account
Rules,2020 Rules Deal with the closure of all Commercial accounts with commercial banks and
transfer of funds to TSA Account1(non-Food). It also describes process of accounting
transactions and transfer of funds to and from FCF & Public Account and reconciliation of
Accounts. The Working Paper by IMF in 2010 namely Treasury Single Acount Concept, Design,
and Implementation Issues has elaborated the concept of Treasury Single Accounts. It has
defined TSA as a mechanism for consolidating and managing Govt’s cash resources and
minimizing cost of borrowing. It has advocated TSA as a Public Finance Management Reform
Agenda. The paper presents various forms and models to design TSA. Financial Stability
Review 2008-2009 by SBP has identified challenges to commercial Banks which hold 11% of
Government accounts. (SBP, 2009) . It further states that Government deposits with the
Scheduled Banks are renumerative accounts. These are either Saving or Term Deposit accounts,
hence the Commercial Banks will get effected with the TSA. Areeba Shahid in an article namely,
“ Another missed target:Pakistan unlikely to fulfill claim of implementing TSA by year End ”
describes historic evolution of concept of TSA and Pakistan’s engagements with IMF on this
issue. The author describes initial engagements in the year 2008 and partial successes and also
highlights delays which hindered the progress and recent developments. (Shahid, 2022)

2
1.3 Terms of Reference

The specific requirements of the Research Group are as follows:

(i) understand various dimensions of Pakistan’s cash management system and how it
has been institutionalized at the federal and provincial level.
(ii) undertake situational analysis of the implementation of TSA in the federal
government.
(iii) objectively ascertain and evaluate the performance of Ministry of Finance in
implementing the TSA as envisaged in the applicable legal framework.
(iv) identify key issues and explore the challenges that hinder implementation of the
TSA in the country.
(v) study some best regional and international practices for possible emulation by the
MoF.
(vi) produce doable short, medium and long-term recommendations supported by an
action plan for each recommendation to address above challenges.

Section – II:
Research Methodology

The study has been conducted using exploratory research method with a descriptive
research design. Snow ball non probability sampling method was used for collection of primary
data through open ended and semi structured interviews. Focused group discussions were carried
out with selected groups for in depth study of the issues. For secondary data various research
journals, reports and record of concerned agencies have been used. The group undertook focused
field visits and contacted resource persons for collection of primary data. Both quantitative and
qualitative analyses were performed.

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 Section-III:
Situational Analysis

3.1 Historical evolution of TSA

The concept of Treasury Single Account has its foundation in the Articles 78 and 79 of
the Constitution of Pakistan, 1973 that deal with the formulation of the Federal Consolidated
Fund and public moneys, which provide that all loans received by the government and all
moneys raised by it in repayment of loans shall form part of the consolidated fund. All other
moneys received or on behalf of the federal government; or received by or deposited with the
Supreme Court or any other court established under the authority of the federation; shall be
credited to the public account of the federation. (Documents; National Assembly of Pakistan,
2023). Whereas, articles 118 and 119 deal with provincial consolidated fund which state that all
revenues received by the provincial governments, all loans raised by that government and all
moneys received by it in repayment of any loan shall form part of a consolidated fund, to be
known as the provincial consolidated fund. All other moneys received by or on behalf of the
provincial government; received by or deposited with the High Court or any other court
established under the authority of the province; shall be credited to the public account of the
province. (Documents; National Assembly of Pakistan, 2023)

Whereas, as provided under article 79 of the constitution of the Islamic Republic of

Pakistan, it is expedient to provide for regulating the custody of the federal consolidated fund,
the payment of moneys into that fund, the withdrawal of moneys therefrom, the custody of other
moneys received by or behalf of the federal government, their payment into and withdrawal
from, the public account of the federation and all matters connected with or ancillary thereto; and
whereas to give elaborate mechanism of public finance management as envisaged in articles 78
to 88, 118 to 127 and 160 to171 of the constitution and to guide budgetary management
processes, financial and fiscal controls, cash and banking arrangements, and financial oversight
of public entities. (Documents; National Assembly of Pakistan, 2023).

The implementation of the Treasury Single Account (TSA) in Pakistan has undergone a
gradual and phased development over the years. The concept of a centralized treasury

4
management system was introduced in Pakistan in the year 2008 to improve financial
management, enhance transparency, and consolidate government funds. The initial steps towards
implementing the TSA were taken by the State Bank of Pakistan (SBP) and the Ministry of
Finance. To provide legal backing for the TSA implementation, the Government of Pakistan
enacted the Public Finance Management Act (PFMA), 2019. Section 30 (2) (d), of the PFMA
empowered the federal government to consolidate its cash and bank balances into the TSA,
which would be operated by the SBP. (Public Finance Management Act, 2019). Since then, the
TSA implementation has been a continuous process in Pakistan and an amount of Rs. 1967
billion has not been accounted for. The federal government, along with the provincial
governments, has taken steps to bring all relevant government entities and departments under the
umbrella of the TSA.

It is important to note that the TSA implementation in Pakistan has been supported by
various government directives, circulars, and notifications issued by the SBP and the Ministry of
Finance from time to time. These notifications have provided guidance on matters such as the
opening of TSA-linked accounts, the consolidation of government funds, the role of authorized
banks, and reporting requirements.

5
3.2 Policy & Institutional Arrangement

Figure 1: Centralized Payment by the Treasury from the TSA

SBP regulates the money for optimal utilization of monetary resources. It further acts as a
regulator for commercial banks and monetary and credit system of Pakistan. Ministry of Finance
ensures effective execution of equitable economic and financial policies for sustained economic
development and macroeconomic stability. The implementation of TSA is prime responsibility
of MoF with the help of SBP.

Cash Management & Treasury Single Account Policy 2019-29 was approved by the
Federal Cabinet on 03-06-2019 and was consequently made part of the Public Finance
Management Act, 2019. Subsequently, Cash Management and Treasury Single Account Rules,
2020 were issued. The Policy is a vital instrument devised by Finance Division for improved
Public Finance Management with the objective of timely availability of cash to meet obligations,
economizing on cash within Government so as to save interest costs and management of
government’s cash flows efficiently in a way that benefits debt management, and monitory
policy. (Cash Management Policy; Ministry of Finance, Government of Pakistan, 2023). Finance

6
Division aims to implement the policy with the cooperation and support of all Ministries
/Divisions, Departments and Entities.

3.3 TSA implementation at Provincial levels

The Public Finance Management Act, Punjab (PFMA), 2020, Khyber Pakhtunkhwa
Finance Act, 2019, Sindh Public Finance Management Act, 2019 and Baluchistan Public Finance
Management Act, 2020 (BPMFA) have been promulgated and these legislations provide legal
framework for establishing TSA at provincial levels. However, the relevant rules subservient to
law are under consideration. So far, the progress made by the provinces in this regard is not very
encouraging. Legislation in the form of finance acts and rules have been made by all four
federating units but little has been made in implementing. There is huge public money parked in
various commercial Banks. This money is in the form of unutilized Budget, development funds,
investments, endowments, salaries, pensions and funds for Public Sector Development
Programme (PSDP) which are not consumed during the financial year or by the end of the year.
This money is used by government entities but not used by the provincial governments which in
turn adds financial burden and provincial governments resort to borrowing or deficit financing.
Financial prudence can only be effective by efficient utilization of resources. Immediate
measures for transformation to TSA regime is key to financial accomplishment for the provinces.

3.4 Impact of TSA on Cash flow in Pakistan

With the introduction of Treasury Single Account, the government of Pakistan tried to
integrate public revenue mobilization and expenditure on a common platform in order to bring
financial discipline, reduce government borrowing cost, fair cash forecasting and reconcile
numerous accounts. The present situation depicts that process has started at federal level and has
been successful to the extent of some federal ministries wherein ministries have been able to
close down various accounts in the commercial banks. With the introduction of implementation
of TSA, decentralized operation of accounts started to move towards a single centralized account
with the closure of some bank accounts at the federal level. However, cash of only Rs. 5 billion
came into federal consolidated fund by closure of approximately 4500 accounts through these
measures. (Anwer, 2023). It reflects that the pace of progress in this regard is quite sluggish

7
despite lapse of three years and still 220 federal entities are outside the ambit of TSA. Since the
year 2020, many accounts especially pertaining to Ministry of Defense and autonomous entities
have still been operating outside the ambit of TSA. At the provincial level, though instructions
have been communicated to the departments and to the autonomous bodies and instructions have
also been given by State Bank of Pakistan to the commercial banks vide circular No. 01 of 2021
dated April 06, 2021 for implementation of cash management and single account treasury rules
(Circular No. 01 , 2021), yet there has been a lot of resistance.

3.5 Analysis of Entities outside the ambit of TSA:

The implementation of TSA in Pakistan remained slow even at the federal level.
Accounts belonging to Ministry of Defense and various autonomous bodies remained outside the
purview due to certain legal and operational impediments. There are certain entities under
different ministries which, owing to special laws and sensitive nature of security reasons, are still
out of TSA. Autonomous bodies are created on the basis of Independent Legislation and have
financial liberty. The legal Scope of TSA has to be extended to these Autonomous bodies. Their
integration in the mainstream TSA and component of Public Money, its identification and
financial viability is a challenge for success of TSA. The legal framework of Autonomous bodies
can be modified by single legislative amendment to declare that Public Finance Act, 2019 will
have over-riding effect over Autonomous Bodies Legislation or individual amendments in
relevant laws and rules made thereunder. As per Report of Finance Division, various government
entities are maintaining huge account balances in different banks. The detail is as given below.
(Finance Division, 2023)

Table 1: Amounts of Various government entities in different banks

PKR PKR
Group Group
(in billion) (in billion)
Defence 839.506 Retirement Funds (EOBI, WWF) 12.223
Atomic Energy Commission 224.387 Other Service Providers 11.695
NHA 161.290 PEC 10.489
Courts and Tribunals 106.310 Commercial SOEs 7.656
Other MDA 93.446 NH&MP 7.569
Universities 88.830 District Administration 5.938
Other Educational Institutes 52.406 Privatization Commission 5.751
SUPARCO 43.564 PD&SI, National Endowment Scholarships 5.524

8
 Disaster Management 38.636 UET 4.998
AIOU 37.012 PM&DC 3.995
NADRA 33.475 SECP 2.590
Finance Funds 29.230 NEPRA 2.299
BISP 27.103 Civil Services Academy 0.361
Civil Armed Forces 18.824 Other Sports Boards 0.254
Hajj Deposit 18.397 Pakistan Sports Board 0.222
PCB 18.302 VU 3.695
HEC 18.299 QAU 2.708
FBR 17.182
Total 1967.07
NAB 12.899

A special arrangement must be in place. A distribution structure of TSA should be

adopted to allow Ministry of Defense to integrate itself with the TSA regime by maintaining its
various accounts and at the end of the day to integrate itself to Central TSA. All accounts of
ministry of defense are required to be identified. Subtotal of Ministry of defense accounts should
be maintained separately in order to maintain the secrecy and security.

3.5.1 Comparison of number of accounts holders and deposits:

As per another report of Finance Division, a small number of account holders hold bulk
of the deposits. A total of 90,119 accounts of government entities holds deposits of PKR 1.991
trillion. (Secretary, 2023). However, further analysis reveals that only 10,338 bank accounts
(11%) hold 98% of the deposits and remaining 79,781 (89%) accounts have only 2% of the
deposits. (Secretary, 2023)

900 830
800
700 624
600
514
500
PKR in billion

400
300
200
100 25
0

9
 Figure 2: Comparison of number of accounts holders and deposits
3.5.2 Analysis of Accounts with No returns to entities:
Further analysis depicts that 27% of these deposits are current accounts which yield no
returns to the respective entities. (Secretary, 2023)

Figure 3: Analysis of Accounts with No returns to entities

3.5.3 Analysis of share of commercial banks in current account deposits:

Furthermore, almost 77% of deposits are held by only 5 commercial banks. National
Bank of Pakistan (39%), Out of which NBP holds 90% current account deposits followed by
Askari Bank (19%), Habib Bank Limited (8%), Allied Bank Limited (6%) and United Bank
Limited (5%). (Secretary, 2023). This has also been depicted graphically as under.

10
 Others;
281.826977845384;
14%
MCB; 45.7425648598; NBP
2%
JS Bank; NBP; 771.319953892; Askari
BAFL; 67.0056; 3%
74.3475088311821; 39% HBL
4%
ABL
UBL;
96.8236857845294; UBL
5% JS Bank
BAFL
ABL;
108.673236534529; MCB
6%HBL; Others
152.09945533843; 8%
Askari; 369.22757889791;
19%

Figure 4: Share of commercial banks in current account deposits

3.5.4 Analysis of Federal Divisions/Entities with 70 percent of the deposits:

Only ten (10) Divisions/entities hold over 70% of the deposits as shown by table below.
(Secretary, 2023)
Table 2: Federal Divisions/Entities with 70 percent of the deposits
Type of Deposit (PKR bn)
Division / Entity
Current Savings TDR Total
Defense 85.04 349.51 278.30 712.85
Atomic 165.15 28.01 6.74 199.91
NHA 59.58 101.71 - 161.29
Selected MDAS* 52.10 46.30 19.65 118.05
Courts 17.45 8.85 68.48 94.78
SUPARCO 17.41 15.48 5.41 38.31
Fauji Foundation - 18.88 15.06 33.94
NADRA 1.44 17.35 14.63 33.42
NAB 12.85 0.05 - 12.90
FBR 9.07 0.24 0.30 9.61
420.09 586.38 408.57 1,415.04
* Selected high-value MDAS accounts include Ministry of Social Welfare, Finance Division, Religious
Affairs, PM Secretariat, and Privatization Commission
As major entities are still outside the ambit of TSA, MoF in consultation with SBP has
recently introduced a mechanism of Sweep-in and Sweep-out mechanism. By this mechanism,
the last transaction of the day would be sweeping in balances of entities in Account No. 1 and on
the very next day, the balance would be swept back to the accounts of entities. This daily process
would be performed through Real Time Gross Settlement (RTGS) mechanism, which is already
in place between SBP and commercial banks. The six accounts maintained by MoF have been

11
swept in and swept back successfully through a pilot initiative. (Anwer, 2023) This mechanism
would help in depicting true picture of overall cash balance available with the government
accounts. It would also help for MoF in assessing exact borrowing needs.

3.6 Analysis based on Focused group discussions, zoom meetings and Open
ended/ Semi-structured interviews

The primary data was collected through open ended and semi structured interviews with
concerned officers of Ministry of Finance, State Bank of Pakistan, CGA, AG Punjab,
Commercial Banks, NITB, Federal Divisions, Attached Departments, Subordinate offices,
Development authorities and Autonomous bodies. Focused group discussion and zoom meetings
were convened with the experts and resource persons for in depth analysis of the issues. The
results of semi structured interview show that 80% of officers fully agreed that Treasury Single
Account reforms are essential for Pakistan. While 70% of the officers expressed that progress of
TSA implementation is slow in Pakistan. 70% of the officers identified legal issues as major
hurdle and 60% recommended centralized structure of TSA for implementation in Pakistan.

Table 3: Results of open ended/ semi structured interviews

Sr Question Results
No.
1 Whether Treasury Single Account reforms
Fully Agreed Partially Agreed Not Agreed
are essential for improvement of cash flow
80 % 15% 5%
in Pakistan?
2 What is the progress of TSA Slow Medium Fast
implementation in Pakistan? 70 % 25% 5%
3 What are the major hurdles in Legal Administrative Technological
implementing the TSA? 70% 15% 15%
4 What type of structure of TSA is suitable in Centralized Decentralized Mix of both
Pakistan? ^60% 10% 30%

The fear of commercial banks regarding losing profit was discussed at length with the
resource persons who pointed out that the disbursement limit options and paying mutually agreed
upon nominal cost of transaction are the options to be discussed with commercial banks
especially five banks holding major amount of deposits. The experts during zoom meeting
further suggested that TSA has to be applied in a phased manner. A centralized system where all

12
commercial accounts of public entities and sub accounts are merged into a central singular
account for the sake of unity and uniformity of accounts. The example of Sweden where several
Linked Accounts; outside TSA main account where their balances are automatically swept off at
the end of the day to main TSA account was also discussed in detail. The option of allowing
Individual line agencies to have separate Transaction accounts was also brought under
discussion. The issue of bringing autonomous bodies into the TSA regime was deliberated upon
and it was suggested that Pakistan needs to work on hybrid model to integrate multifarious
regulatory requirements of various entities which are still out of the ambit of TSA.

Some analysts have said that in the event of MDAS fully complying with the directive to
pay all their monies into a Treasury Single Account, TSA, banks may lose major sum saved with
them by the MDAS. This may affect their profitability in short-run. However, the banks would
be forced to come up with new products and schemes to maintain their profitability in the long -
run. (Naqvi, 2023). According to a representative of Ministry of Finance, so far only Rs. 5 billion
were received in Account No. 1 through closure of approximately 4500 bank accounts since
initiation of TSA regime in 2020. (Sajjad Azhar, 2023). Finance Division has now adopted a
system of Sweep-in and Sweep-out mechanism and successfully swept-in and swept-out 6
accounts of Ministry of Finance. Through this mechanism, at the close of working day, all the
balances are swept in or transferred to a Single Account and next morning, balances are swept
out or transferred back to operational decentralized bank accounts of entities at the start of next
working day. Sweep-in and sweep-out mechanism has two variations. First variation is full
authorization to entities to spend and second option is Disbursement Limit Option with a ceiling.
This decentralized architecture of Sweep-in and Sweep-out is more conducive from the
operational point of view and more transparent for the reporting and cash forecasting
perspective.

3.7 PESTL Analysis

The RG conducted a PESTL analysis to identify external environmental challenges in

implementation of TSA reforms. This scanning of external environment helped in understanding
the issue in greater depth.

Table 4: PESTL Analysis

13
 Political Economic Social Technological Legal

Cost of Wrong Perception Limitations of soft Need of amendments in

Lack of
implementation about freezing of interface with respective laws of
political will
accounts smaller banks entities

Loss of profits Lack of trust.

Political Absence of e- Overriding effect of
for the bank’s Cultural
instability Portal TSA Law
entities impediments

Change in Absence of Laws of Autonomous,

Policy Cost of Reliance on
Electronic bank Judicial and Security
transactions traditional mode
accounts organizations

3.8 Stakeholders’ Analysis

The RG conducted a stake holder analysis to identify and understand their needs and
expectations from the TSA reforms. It helped in developing an insight as to how TSA reforms
can create impact on them and how they can have influence over its implementation. It also
helped in understanding how TSA reforms are important for them and what can they contribute
in its implementation. The analysis also helped in assessing the frequency of communication
among different stake holders.

Table 5: Stakeholders’ Analysis

Stakeholder Impact Influence What is How could the How to engage
Name How much How much important to stakeholder the stakeholder
does the influence do the contribute to for
TSA impact they have stakeholder? TSA implementation
them? (Low, over the Implementation
Medium, TSA? (Low
High Medium,

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 High)
Monthly
Ministry of Maintaining Steering and meeting of
High
Finance High cash balance guiding steering
committee
Ensuring
stability of
State Bank of Regulating the
inflow and Weekly meeting
Pakistan flow of cash
High High outflow of
balances
balances
Surrendering Information and
Commercial Maintaining
High High cash to Single feedback every
Banks Profitability
Account daily week
Weekly Progress
Ensuring Swift
MDAS Medium Medium Review
Operations Implementation
Meetings
Monthly Review
Reviewing legal
Ensuring Meeting with
Autonomous framework and
High High availability MoF and
Bodies cooperating with
of liquidity concerned
the Government
ministries
Proper Monthly
Establishing
accounting meeting of
CGA Low Low accounting
and auditing accounts
framework
framework committee

3.9 International Best Practices

The RG studied various successful models of TSA in the world including France, United
Kingdom Australia, United States, Sweden and India with view to assess their structure,
efficiency and effectiveness on cash flow.

3.10 Contextualization and Lessons Learnt

The RG after studying best practices contextualized the lessons learnt for their successful
implementation in the local context with reference to Pakistan (IMF, Public Financial
Management Reforms-Government & Treasury Single Account, 2017)

Table 6: Lessons Learnt

Area Indicator India Sweden

Consolidated account Federal Several
Centralized. Distributed linked accounts
Structure Distributed accounts States outside TSA

15
 Decentralized
Reduced borrowing
cost Sweep in &
Upgradation of IT Sweep out of
Efficiency Improved cash flow
infrastructure daily basis
No Political
interference

Section-IV:

Challenges
4.1 Legal challenges:

Autonomous bodies have specific legal provisions for opening of bank account under
their relevant laws. The autonomous bodies such as NADRA, SUPARCO etc. have a peculiar
structure based on specific laws that allows these organizations to open and maintain accounts
under specific provisions of respective laws. SUPARCO has balance of Rs. 43.564 billion.
Section 12 of SUPARCO Ordinance, 1981 allows opening of account but there is no explicit
power to invest. Similarly, NADRA is in possession of an amount of Rs. 33.47 billion in 60
accounts. Under Section 26A of NARDA Ordinance, surplus money is to be returned to FCF. As
per NADRA Ordinance, account opening permission has been granted but no power to invest is
vested. Likewise, Disaster Management has Rs. 38.636 billion. Section 29 (4) of NDMA Act,
2010 permits opening accounts in scheduled banks but no authority to invest is there.

At provincial level, Section 20 of Punjab Curriculum & Text Book Board Act, 2015 and
Section 22 of Punjab Gazette empower PCTBB and Lahore Board of Intermediate and
Secondary Education respectively to open accounts in commercial banks (Mansoor Elahi, 2023).

Addressing the above-mentioned legal hurdles requires comprehensive legal reforms,

amendments, or clarifications to ensure compliance and smooth implementation.

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4.2 Administrative Challenges:

As per notification of Finance Division all commercial Bank accounts of Public Entities
had to be closed down by August 2022. (Government Treasury Single Account Closure of
Government Accounts maintained with Commercial Banks/DFIs , 2020). But there are many
organizations, public entities, Ministries, Autonomous Bodies and trusts that have not complied
with TSA Regime. All bank accounts which have public money needs to be identified and
scrutinized by the Finance Division, State Bank of Pakistan and concerned departments. A
comprehensive list of commercial Accounts by each Ministry, Department, Division,
Autonomous bodies and all Government, Semi-Government and private entities which involve
public money must provide a completely signed list of accounts with commercial banks and a
certificate asserting veracity of the claim thus made.

4.3 Technological Challenges

A unified System of Banking in Pakistan is required which can cater to the requirement
of TSA. Transaction on the pattern of Real Time Gross Settlement (RTGS) for fund Transfer
from commercial Bank Branches to Account-1 of State Bank of Pakistan and reverting back to
commercial Bank require Uniform Software for all commercial and government banks. The
software needs to be integrated in the system and should be able to transfer account accurately at
fast pace. This should also serve the integration among provincial bank accounts and Federal
State bank. Moreover, Ministry of Finance is required to develop an online portal for continuous
information and monitoring of cash balances with the assistance of National Information
Technology Board (NITB). (Sajjad Azhar, 2023).

4.4 Conclusion

The government of Pakistan has implemented TSA but its implementation has hit snags
due to legal discrepancies, technological limitations and operational difficulties. It can be put on
track with focused intervention in problem areas in order to reduce borrowing costs and for
efficient and effective cash management.

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 Section-V:
Way Forward
5.1 Recommendations

1. Ministry of Finance must conduct a comprehensive survey to identify all existing

accounts held by public entities and assess the cash available in those accounts. There is
need to identify and segregate those accounts which are maintained by organizations with
the contribution of employees, or accounts with security moneys of some sort. Only the
revenue accounts and the accounts receiving grants from the government are required to
be brought in TSA.
2. There is a need to review laws of autonomous entities and government-owned
companies, whether they are allowed to open saving and term-deposit accounts in
commercial banks. If not, then these entities can be barred from maintaining such
accounts else amendments in relevant laws be made or the government would have to
compensate such entities by offering interest on the deposits maintained by those
organizations. However, pension funds and endowment funds should not be brought into
TSA.
3. Ministry of Finance should develop an online portal with the help of NITB and SBP so
that the cash balances of all government entities can be monitored continuously and cash
forecasting and borrowing needs can be assessed timely.
4. Ministry of Finance should actively pursue government entities for including those
entities into ambit of TSA and take them on board. At federal level, 10 entities having the
highest amounts (70%) in banks be brought into ambit of TSA first through Sweep in /
Sweep out mechanism with Disbursement Limit Option. However, pension funds and
endowment funds of these entities should be kept out of fold of TSA.
5. Ministry of Finance should work with the provincial finance departments and take them
into fold of TSA for further strengthening the consolidated cash balance.

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5.2 Strategy Formulation

Though the system of Treasury Single Account has been rolled out, yet as we have
observed in the previous pages that there are certain gaps in implementation of TSA. In order to
bridge the gaps certain recommendations along with action plan have been devised. Since the
beginning of TSA regime in the year 2020, multiple efforts were made to bring all government
entities into TSA. The Finance Division held a conference of all stakeholders at Islamabad for
awareness. Moreover, the Finance Division and SBP issued various circulars and guidelines. Due
to these efforts certain accounts were closed, however only Rs. 5 billion have been added in
Account No. 1 till now; lets name it as Point “A”. We are going to propose a strategy to reach at
point “B” considering the current point as point “A”. Point B would be bringing ten (10) entities
having material amounts in their respective accounts to the fold of TSA. However, pension funds
and endowment funds should not be brought into the fold of TSA. These entities almost hold
70% i.e., Rs. 1415 billion of total deposits. The Vision, Mission and Action Plan of this strategy
are given below.

5.2.1 Vision

To reduce debt and debt servicing of Government of Pakistan through prudent financial
management.

5.2.2 Mission

To integrate accounts of 10 high-profile public-sector entities having 70% of cash

balance into Central Account No. 1 through TSA within two years.

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5.2.3 Action Plan
Recommendation 01: There is a need to review laws of autonomous entities and public sector companies
Goal: Discrepancies in laws of entities with Finance Act to be removed
Executing
Sub-Goals Targets KPIs Timeframe Costing
Agencies
Laws and rules of
1.1 To identify Number of Ministry of Law,
all PSEs to be
discrepancies in entities Concerned 6 months 2 million
studied and
laws studied Ministry
reviewed
1.2 To amend To amend laws of Number of Ministry of Law,
relevant 80% high profile laws Concerned 1 Years 5 million
laws/rules entities amended Ministry
Recommendation 02: Ministry of Finance should develop an online portal
Goal: To develop a portal for online monitoring and cash forecasting
Executing
Sub-Goals Targets KPIs Timeframe Costing
Agencies
No. of
2.1 To establish 100% completion of SBP,
features 6 months 5 million
an online portal task NITB
added
No. of
2.2 To develop IT
entities SBP,
based cash 100% completion of
brought into NITB. 1 Year 5 million
forecasting task
fold of MoF
mechanism
mechanism
Recommendation 03: Ministry of Finance should actively pursue government entities for including those
entities into ambit of TSA.
Goal: To bring balances of entities into TSA
Executing
Sub-Goals Targets KPIs Timeframe Costing
Agencies
100%. To bring all
3.1 To bring accounts into TSA Number of Ministry of
current accounts through Sweep current Finance, SBP, Within existing
6 months
of 10 entities into in/Sweep out with accounts Concerned resources
TSA Disbursement Limit transferred Ministry
Option
To bring 80%
accounts excluding Within existing
3.2 To bring Number of Ministry of
pension funds into resources with
Saving accounts saving Finance, SBP,
TSA through Sweep 2 Years assumption that
and TDs of 10 accounts Concerned
in/Sweep out with no interest is to
entities into TSA transferred Ministry
Disbursement Limit be paid.
Option

5.3 Contingency Plan

In case Ministry of Defense or some of the security related sensitive organizations refuse
to come into the ambit of TSA due to sensitive/secret nature of their tasks, then their inclusion to
the extent of specific secret accounts may be may be deferred. So, the rest of organizations may
be focused for inclusion in the first phase. Accordingly, the Action Plan may be amended.

20
 References
Anwer, R. O.-u. (2023,

June). (S. Farooqi, Interviewer)

Cash Management Policy; Ministry of Finance, Government of Pakistan. (2023, June). Retrieved
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https://www.finance.gov.pk/CashManagement_2019_2029.pdf

(2021). Circular No. 01 . Karachi: State Bank of Pakistan.

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Pakistan: https://na.gov.pk/uploads/documents/1549886415_632.pdf

Finance Division, J. S. (2023). Implementation of Treasury Single Account. Islamabad.

(2020). Government Treasury Single Account Closure of Government Accounts maintained with
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IMF. (2010). Treasury Single Account Concept, Design and Implementation Issues.

IMF. (2017). Public Financial Management Reforms-Government & Treasury Single Account.

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(n.d.). Public Finance Management Act, 2019. Islamabad: Printing Press of Pakistan.

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Secretary, F. D. (2023). Treasury Single Account. Islamabad.

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