The government saved some P437.8 million by closing 266 dormant and unnecessary bank accounts of agencies last year in line with efforts to improve its cash management system.
In a statement, the Department of Budget and Management (DBM) said they are installing a Treasury Single Account that will enable the government to consolidate its cash resources on a daily basis.
Dormant accounts refer to collections deposited in Authorized Government Depository Banks (AGDBs) but have remained inactive for more than five years.
The DBM said that in that in the past, the government incurred debt in order to address perceived cash shortages even if it had a lot of cash lying around in its many bank accounts.
According to the DBM, previous reports by the Commission on Audit (COA) have pointed out that dormant accounts form part of the huge cash balances being maintained by government agencies in AGDBs and other institutions.
The budget agency said COA will soon issue guidelines and procedures for the transfer of P437.8 million worth of savings from all the dormant bank accounts to the government’s General Fund.
“That included the P437.8 million that we recently saved by closing inactive bank accounts. Through the years, we’ve been borrowing cash even if we’re liquid anyways, just because such cash is hidden from the Treasury’s view as a result of our fragmented cash management system,” Budget Secretary Florencio Abad said.
Once fully set in place, the Treasury Single Account will provide the government with a full view of its cash resources on a daily basis, enabling it to “sweep up” dormant cash to fund upcoming payables.
The Treasury Single Account requires a complete inventory of existing bank accounts of government agencies along with the closure of dormant ones, and this inventory is still being completed by the Bureau of the Treasury (BTr).
“The P437.8 million that we recently saved is much smaller than the billions that we can further save from borrowings and money handling costs,” Abad noted.
He said the Treasury Single Account is one of the key projects under the Philippine Public Financial Management Reform Roadmap, which seeks to enhance transparency, accountability, and efficiency in the management of public funds.