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Govt mulls shifting of deposits to SBP

Updated April 18, 2019

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The old State Bank of Pakistan building, now known as the State Bank Museum. ─ Wikimedia Commons
The old State Bank of Pakistan building, now known as the State Bank Museum. ─ Wikimedia Commons

KARACHI: The government is examining a proposal to introduce the Treasury Single Account (TSA) to shift deposits of various government departments and organisations with the State Bank of Pakistan (SBP).

“While the proposal to introduce TSA is being examined by the Government of Pakistan in consultation with the SBP as part of its agenda to reform public financial management, however, no decision has yet been made to implement the TSA,” a press release issued by the SBP said on Wednesday.

The SBP said that any decision in this regard will be taken after due consultation with all stakeholders and assessing its impact on the banking sector.

While the bankers expressed their disappointment over the proposal saying that the government wanted to reduce its net borrowing from the banking system.

The government has been borrowing from the SBP and retiring its debt to the scheduled banks but the net borrowing still remains over Rs1 trillion. If the government shifts the deposits of various government departments and organisations, the net borrowing could come to zero or close to zero levels.

Sources in the financial circle believe that the introduction of TSA could eliminate corruption from the deposits of various government departments and organisations.

The SBP said that it will be premature to form an opinion about the proposed policy decision and thus the market players should avoid engaging in any speculative activities based on this proposal which is still under examination.

Published in Dawn, April 18th, 2019