ISLAMABAD: The federal government has ordered all ministries, divisions, the four provinces, Azad Kashmir and Gilgit-Baltistan to immediately surrender their working capital and surplus funds kept for investment, and deposit the money into the single treasury account of the federation.

The decision will apply to all public sector enterprises as well.

Through a memorandum, the Ministry of Finance has conveyed to the registrars of the Supreme Court and all the high courts, the Senate, the National Assembly and the controllers of accounts of all military organisations that all notifications since July 2003 enabling such entities to keep surplus funds and working capital in their own accounts “are hereby withdrawn with immediate effect”.

“Further, the approval accorded to public sector entities with respect to maintain working balance are also hereby withdrawn (sic),” said the notification.

Finance ministry rescinds decision allowing entities to keep working capital in ‘own accounts’

Finance Minister Miftah Ismail has repeatedly said over the past month the budget deficit for the current fiscal year was estimated at Rs5.6trillion and set to reach Rs6.4trillion by end of the fiscal year after taking into account the fuel and electricity subsidies.

He has also blamed the PTI government on record for not allocating funds for these ‘unrealistic’ subsidies.

The country’s economic team, led by Mr Ismail, is currently in Doha, Qatar, to negotiate the revival of the IMF programme derailed at the last moment because of introduction of large fuel and electricity subsidy schemes by then prime minister Imran Khan on Feb 28.

The finance ministry’s order explained that Article 78 of the Constitution stipulated all funds received by or on behalf of the federal government are deposited either as part of the Federal Consolidated Fund (FCF) or Public Account of the Federation (PAF).

The cash balances of both FCF and PAF are maintained under central account No.1 (non-food) at the State Bank of Pakistan while Article 79 requires the custody and the payment of moneys from and to the central account be regulated by an act of parliament.

The finance ministry reminded all concerned that parliament had promulgated the Public Finance Management Act (PFMA) in 2019. It now governs all the matters of FCF and PAF and requires the operations of the FCF and PAF to vest in the finance division under the overall supervision of the federal government.

Furthermore, section 23(2) of the act also “requires that no authority shall transfer public moneys for investment or deposit from the government account, including the Assignment Accounts, to any other bank account without prior approval of the federal government”.

On top of that, section 45 of the act “provides overriding effect over all other laws and any law inconsistent with this act” while rule 4(4) of Cash Management and Treasury Single Account Rules 2020 stipulate that no authority shall transfer public monies in contravention of sub-section (2) of section 23.

Under various notifications, the working balances and investment of surplus funds belonging to PSEs and local and autonomous bodies were permissible to be deposited with any public or private bank for their operations subject to a set of conditions and criteria.

Published in Dawn,May 24th, 2022

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Price bombs
Updated 18 Jun, 2024

Price bombs

It just wants to take the easy route and enjoy the ride for however long it is in power.
Palestine’s plight
Updated 17 Jun, 2024

Palestine’s plight

While the faithful across the world are celebrating with their families, thousands of Palestinian children have either been orphaned, or themselves been killed by the Israeli aggressors.
Profiting off denied visas
Updated 19 Jun, 2024

Profiting off denied visas

The staggering rejection rates underscore systemic biases in the largely non-transparent visa approval process.
After the deluge
Updated 16 Jun, 2024

After the deluge

There was a lack of mental fortitude in the loss against India while against US, the team lost all control and displayed a lack of cohesion and synergy.
Fugue state
16 Jun, 2024

Fugue state

WITH its founder in jail these days, it seems nearly impossible to figure out what the PTI actually wants. On one...
Sindh budget
16 Jun, 2024

Sindh budget

SINDH’S Rs3.06tr budget for the upcoming financial year is a combination of populist interventions, attempts to...