The government has started a new plan to get back all the unused money held by public offices in commercial banks.
This action is meant to pull government money back into the main banking system and is part of the first steps to launch the Treasury Single Account (TSA), a system created by the National Treasury and the Central Bank of Kenya (CBK).
CBK will use the new system to test and see all bank accounts used by government bodies.
Jonah Wala, a director at the National Treasury, told The EastAfrican, the new system came about after a survey last year to count and value these accounts failed because the Treasury found the banks to be insincere with the information they gave.
“We have developed a system that can view all our bank accounts from CBK. That part is done, and we are currently testing it.”
“The system we’re using is a viewing platform that helps us identify where the bank accounts are. The Central Bank of Kenya will have access to see all those balances and link them to specific ministries. When we need to make a payment and find that the cash is not being used for any meaningful purpose, it justifies us to recall it and use it for another public need,” Wala said.
No Interest
The Treasury stated that taking back the idle cash will help the government use its own money to pay for new needs and reduce borrowing, which costs a lot in interest payments.
It noted that public bodies, like ministries and government agencies, will no longer earn interest on these deposits, which is currently about 8.07 percent.
Wala revealed that the public offices will be told whenever a decision is made to take back idle cash.
“When we decide we need more money, we’ll call you, for instance, and say: ‘You have this amount, it’s been in the bank with no movement for three or four months, we’re using it for this purpose instead of borrowing.’ When we get the money, we’ll return it to your account,” he added.
“We haven’t fixed the recall timelines yet, but we’re calling them idle balances, and there are quite a number of them in government. The committee will come up with the finer details,” he said.
The new TSA system will allow ministries to keep accounts at the central bank. State corporations can keep their accounts at commercial banks, but only if they do not hold idle cash.
