A plan to create a single Treasury account for the government is long overdue. Besides the immediate benefits of breaking down walls in public spending that have led to the State borrowing from its own funds held by other agencies in separate bank accounts, it is also an international best practice as it establishes oversight and centralised control over the government’s cash resources.
A single Treasury account system, which is also supported by the International Monetary Fund, is an accounting system that eliminates the need for all agencies to have their individual bank accounts and this enables the Treasury to delink management of cash from control at a transaction level.
The Committee on Privatisation has tabled the proposal in Parliament that will see all ministries, departments and agencies (MDAs) have a single Treasury account to ease the collection of surplus cash.
The Treasury data shows that 451 State corporations held Sh84.5 billion in surplus cash in the year ended June 2021, offering a glimpse of the financial lift awaiting the Treasury if the proposal is adopted.
This comes as the Treasury grapples with mounting debt servicing obligations that have squeezed cash for development projects and other critical services like salary payments, prompting the government to ramp up borrowing.
It is, therefore, prudent for the State to seek access to all these funds that will come at zero cost whenever it has to deal with cash shortfalls. This will protect the taxpayer from avoidable interest payments.
The privatisation committee notes that the plan will enhance liquidity management and reduce unnecessary short-term borrowing in the domestic market occasioned by the government’s inability to access surplus funds held in MDAs’ bank accounts.
But parliament must increase its oversight on the Treasury since a single account system will give it unfettered access to these surplus billions, and unless monitored, the money may end up being misappropriated or diverted to non-critical expenditure.
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