Cash-starved Treasury says will take back idle funds of state agencies
The Finance Ministry, in the wake of recent findings of weak financial management of some ministries and departments, has directed all state institutions to implement suitable cash control systems with the aim of streamlining the daily cash flow.
According to Treasury operations circular No 6/2016, it has been found that several ministries and departments are maintaining idle cash balances exceeding Rs. 100 million in their official bank accounts continuously.
Idle cash balances in total amounted to Rs. 21 billion in 2015, a senior Finance Ministry official told Business Times adding that this year it may be much higher.
He said action will be taken to get that excess money back to DST’s (Deputy Secretary to the Treasury) accounts through the Treasury single Account System (TSA).
A directive has been issued to those institutions to remit the idle cash balances in their official bank accounts to the Treasury while maintaining minimal fund requirements with effect from November 1.
According to the Treasury circular, all ministries and departments should make payments only for approved vouchers after close inspection and monitoring of fund position of their official bank accounts.
Those institutions have been directed to ensure that all the pending payments by cheques have been duly settled; properly sent to relevant third parties and realised it within the stipulated time period.
Meanwhile special financial management units will be set up in the Ministries of Defence, Education, Health and Highways for which Rs.100 billion or more has been allocated from the budget on a directive issued by the Treasury.
State Minister for Finance Laxshman Yapa Abeywardena told the Business Times that the budget deficit would be reduced up to 4.4 per cent cutting down state expenditure by at least 10 per cent to Rs. 3.33 trillion while strengthening financial management of ministries, departments and other state institutions.