Move aims to strengthen cash management, cut borrowing costs, and centralize idle public funds under Treasury Single Account reforms
ISLAMABAD: Pakistan has approved a major fiscal consolidation step under its International Monetary Fund (IMF) programme, deciding to close nearly 70 government-held bank accounts and transfer around Rs300 billion (approximately $1.08 billion) into the national treasury, officials confirmed on Sunday.
The decision is part of broader reforms aimed at improving public financial management and reducing the government’s reliance on costly domestic borrowing. Officials familiar with the development said the move follows a staff-level agreement with the IMF reached last month, which emphasized tighter control over idle state funds.
According to finance ministry sources, Pakistan had already shut down 242 similar accounts in earlier phases, shifting nearly Rs200 billion into the Treasury Single Account (TSA). The latest round marks an acceleration of efforts to bring scattered government balances under centralized control.
Authorities also plan to eliminate around 250 additional non-savings accounts, which collectively hold close to Rs400 billion in public funds parked in commercial banks. These funds, in many cases, generate returns for state entities while the federal government simultaneously borrows at significantly higher interest rates.
A senior finance ministry official said the core objective is to “improve cash management and reduce the cost of public debt” by ensuring that surplus government liquidity is used efficiently within the central treasury system rather than remaining fragmented across multiple institutions.
The first phase of the latest consolidation drive will focus on ministries and their attached departments. In subsequent stages, savings accounts held by ministries and divisions are also expected to be reviewed, though officials indicated that partial exemptions may be granted to certain autonomous bodies that do not depend on federal budget allocations.
However, the government is proceeding cautiously regarding autonomous institutions. Officials warn that a blanket restriction on their financial accounts could undermine operational independence and disrupt institutional functioning.
The Senate Standing Committee on Finance has separately flagged concerns over the scale of public funds held outside the treasury system. It noted that nearly 200 public sector entities and regulatory bodies collectively maintain over Rs1 trillion in private bank accounts, potentially violating provisions of the Public Finance Management Act, 2019.
Alongside account consolidation, Pakistan has also committed to extending the average maturity profile of its domestic debt to four years and two months by June 2027. The measure is designed to reduce refinancing risks and stabilize debt servicing pressures.
At the start of the IMF-supported programme, the average debt maturity stood at roughly two-and-a-half years, but officials say it has already improved to about three-and-a-half years as part of ongoing debt management reforms.
The finance ministry said the government remains focused on strengthening macroeconomic stability through structural reforms, broadening the investor base for government securities, and gradually reducing reliance on central bank financing.
Economists say the Treasury Single Account expansion is a key pillar of fiscal discipline reforms, helping governments improve transparency, reduce idle liquidity, and manage cash flows more efficiently. However, they also caution that long-term success will depend on consistent implementation and institutional compliance across federal entities.
Pakistan continues to implement a wide-ranging IMF reform agenda aimed at stabilizing external finances, improving revenue performance, and restoring investor confidence amid ongoing economic pressures.
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