What the IMF’s Single Treasury Account System actually means
The government has been dragging its feet on implementation for nearly a year-and-a-half now By Ariba Shahid
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verytime there is an IMF programme in the country, the rhetoric surrounding it focuses overwhelmingly on the conditions being imposed in exchange for the IMF providing funds to Pakistan. The concept is that when a country borrows from the IMF, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial aid. This system of conditionality is designed to
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promote national ownership of strong and effective economic policies. The policies that the IMF sets can either be general macroeconomic guidelines, or they can be very specific steps that the organization feels the countries taking money from them need to follow. It is because of the imposition of rules like this that there is often tension between governments and the IMF. In the current second stage of the IMF programme Pakistan is in right now, one of the conditions is the adoption of a Single Treasury Account System.
This means the IMF wants Pakistan to close all bank accounts maintained by public sector entities and the defense ministry in commercial banks. All that money is to be transferred to the central bank in one account. The concept is as simple as it sounds - all public money must be gathered in a single account maintained by the central bank. How this will work, however, is a complex issue. The task of adopting a Single Treasury Account System would be gargantuan. According to sources in the finance ministry handling the transition, there are roughly 50,000 bank
