Pakistan expands Treasury Single Account system for better cash control

Pakistan is expanding the scope of its Treasury Single Account initiative as part of broader reforms aimed at improving public cash management, transparency and fiscal oversight, according to official documents.

The initiative, introduced under the Public Finance Management Act of 2019, is designed to consolidate government financial resources into one or multiple linked bank accounts through which the federal government manages all receipts and payments.

The Treasury Single Account system is a way for the government to keep all its money in one central system instead of many separate accounts. It helps ensure that public funds are properly tracked, reduces idle cash in different banks and allows better control over government spending.

The framework is based on Article 78 of Pakistan’s Constitution, which requires all revenues, loans and funds received by the federal government to form part of the consolidated fund.

Officials said Section 36 of the Public Finance Management Act defines public entities broadly to include boards, commissions, corporations, trusts, funds and other organizations substantially financed by the federal government or through taxes and levies.

The government has accelerated implementation of the Treasury Single Account system after notifying the Cash Management and Treasury Single Account Rules 2024 last year.

Under the revised rules, authorities introduced a sweeping arrangement under which funds held in government-linked bank accounts are automatically transferred to the federal consolidated fund at the close of banking hours and returned before the next business day begins.

Officials said the arrangement is intended to improve liquidity management and reduce idle public funds parked in commercial bank accounts.

The Finance Division has so far brought 216 government-owned companies and other public entities under the Treasury Single Account framework, including autonomous bodies, authorities, trusts and corporations operating with administrative and financial autonomy.

As part of the next phase, another 66 entities have been identified for inclusion in the sweeping arrangement in coordination with the State Bank of Pakistan and the office of the Controller General of Accounts.

According to the policy framework, all current accounts of public entities except those linked to defense and national security institutions will gradually be integrated into the Treasury Single Account system unless exemptions are granted under law or specifically approved by the Finance Division.

The Treasury reforms are also being supported by the government’s broader Cashless Economy Initiative aimed at digitizing public financial transactions.

Under the initiative, government payments and collections, including salaries, pensions, social protection disbursements, tax payments and utility bill collections, are being shifted to digital platforms under phased timelines.

Officials said the government also plans to open subaccounts for public entities at the State Bank of Pakistan to centralize receipts and payments, reducing reliance on commercial bank accounts.