IMF agreement, 70 government bank accounts will be closed, Rs300 billion will go to the national treasury

Pakistan has decided to close about 70 bank accounts of government institutions and transfer about Rs300 billion in them to the national treasury, i.e. the Treasury Single Account, under a staff-level agreement with the IMF. The move is aimed at consolidating government financial resources and reducing the cost of borrowing. This is not the first step as 242 accounts have already been closed and about Rs200 billion transferred to the treasury.

According to the Ministry of Finance, a total of 250 more non-savings accounts are planned to be closed, containing about Rs400 billion. In the first phase, 70 accounts of ministries and their affiliated departments will be closed, while in the second phase, ministries and divisions will also close their savings accounts. However, autonomous institutions that do not receive funds from the federal budget are likely to be given a partial exemption as the Ministry of Finance believes that a complete ban could affect their financial autonomy.

The IMF maintains that government agencies earn profits by keeping money in private banks and then the same amount is returned to the government as loans at high interest rates, which is an illogical practice. The Senate Standing Committee on Finance has also expressed concern that about 200 government agencies and regulatory bodies are keeping more than Rs 1 trillion in private accounts, which is a violation of the Public Finance Management Act 2019.

In addition, Pakistan has assured the IMF that by June 2027, the average tenure of domestic loans will be increased to 4 years and 2 months to reduce refinancing risks. At the beginning of the program, this tenure was two and a half years, which has now reached three and a half years. The government will also continue to take steps to stabilize the domestic debt structure, broaden the scope of investors and gradually reduce the debt with the State Bank.