
Recalibrating Pakistan’s Treasury Operations: A Decade of TSA Implementation
Since 2015, Pakistan has embarked on a gradual yet consequential transformation in public financial management through the adoption of the Treasury Single Account (TSA) system. Spearheaded under reforms encouraged by the International Monetary Fund (IMF) and supported by the World Bank, the TSA aims to consolidate fragmented government bank accounts, centralize cash resources under the State Bank of Pakistan (SBP), and enhance fiscal control and transparency.
This reform was part of the broader agenda under the IMF Extended Fund Facility (EFF) agreed in 2019 and earlier PFM-focused programs. The goal: improve cash forecasting, reduce idle balances, and curb the need for expensive short-term borrowing.
The Problem Before TSA: Fragmented Funds and Inefficient Cash Use
Prior to the TSA rollout, Pakistan’s federal and provincial governments operated tens of thousands of individual bank accounts in commercial banks. According to estimates referenced in IMF and World Bank reports, over 50,000 to 70,000 accounts existed at various tiers of government.
This fragmentation caused:
- Large idle cash balances (estimated at ₨200–300 billion),
- Increased reliance on short-term borrowing (SBP recorded ₨1.2 trillion in government borrowing in FY2014),
- Cash flow mismatches, and
- Lack of real-time visibility, hindering effective budget execution and fiscal planning.
The TSA Rollout: A Phased Approach
Under the TSA framework, the government aims to consolidate accounts into a unified structure, with real-time cash visibility through the SBP. The Cash Management and TSA Rules, issued by the Finance Division in consultation with SBP, provide the legal and procedural basis for implementation.
Key milestones (as of 2023):
- 95% of federal self-accounting entities (SAEs) have reportedly been linked to the TSA framework.
- Reduction of redundant commercial bank accounts from tens of thousands to under 5,000.
- Integration of Non-Tax Revenue (NTR) and Receipts from autonomous bodies into the TSA structure is ongoing.
Measurable Impact: Gains and Cautions
While comprehensive national data remains limited, partial estimates indicate early benefits:
Metric | Pre-TSA (2015) | Post-TSA (2023) | Source |
Government bank accounts | 50,000–70,000 | ~4,500 | IMF/WB |
Idle balances (₨) | ₨250–300 billion | ~₨120 billion | WB estimates |
Short-term borrowing | ₨1.2 trillion (FY14) | ~₨800 billion | SBP Debt Bulletins |
Reported benefits include:
- Improved cash forecasting and daily position monitoring through SBP’s IT systems,
- Reduction in idle balances, freeing up ₨100–120 billion annually (World Bank 2021 PFM Review),
- Potential interest savings estimated at ₨40–45 billion between 2019 and 2022, according to internal Finance Division calculations (not officially published),
- Improved development budget execution rates, though causality remains mixed due to multiple overlapping reforms.
Remaining Gaps and Institutional Resistance
Despite federal-level advances, challenges persist:
- Provincial integration is uneven. Provinces like Punjab and Khyber Pakhtunkhwa began partial TSA adoption in 2021–22, while Sindh has made limited progress.
- Autonomous entities and military-related accounts remain outside the purview of TSA in many cases.
- Resistance from line departments, owing to perceived loss of control over funds, has slowed implementation.
- Reconciliation delays between legacy accounting platforms and TSA systems occasionally affect transparency and audit trails.
Looking Ahead: Institutionalizing TSA for Fiscal Discipline
For the TSA to fulfill its potential, the following are essential:
- Full Provincial Adoption: Bringing provincial treasuries and local governments into the TSA framework will ensure end-to-end cash visibility.
- Integration with PIFRA/FABS: Seamless reconciliation between accounting and treasury systems remains critical.
- Automation and AI Forecasting: AI-based cash flow models could enhance liquidity management and reduce ad hoc borrowing.
- Legal and Regulatory Enforcements: Strengthening enforcement through penalties for non-compliance and regular audits under the Public Finance Management Act, 2019.
Pakistan’s move toward a unified Treasury Single Account reflects a significant step in strengthening fiscal governance. While early wins are visible in reduced cash fragmentation and improved liquidity management, sustained success will depend on deeper legal, technical, and institutional reforms.
As highlighted by the IMF, World Bank, and Finance Division, the TSA must evolve beyond a federal tool to become a system-wide standard—embedding fiscal discipline across all levels of government.
This article was published on publicfinance.pk.
Key sources of information for this article include IMF Country Reports, World Bank PFM reviews, SBP debt bulletins and official documents of the Ministry of Finance.