FG Orders State MDAs to Close Accounts in Commercial Banks: Implements TSA Policy Nationwide
In a move to enhance fiscal transparency and improve government revenue management, the Federal Government (FG) has directed all Ministries, Departments, and Agencies (MDAs) at the state level to close their accounts in commercial banks and transfer all funds to the Treasury Single Account (TSA). This directive aims to extend the implementation of the TSA policy to sub-national governments to eliminate revenue leakages and strengthen accountability.
The TSA, first introduced in 2015 by the Federal Government, centralizes public sector funds in a unified account maintained by the Central Bank of Nigeria (CBN). While the policy initially focused on federal MDAs, this latest directive seeks to replicate the benefits of the TSA at the state level, ensuring more effective management of public funds across the country.
State MDAs to Comply with New Directive
The directive requires state MDAs to close all bank accounts held in commercial banks and consolidate their revenues into a single account under the CBN. This measure is expected to improve cash management, reduce borrowing costs, and foster greater efficiency in public finance management.
Industry analysts believe that implementing the TSA across states could curb mismanagement of public funds while improving budgetary control and fiscal discipline. The FG has urged state governments to comply promptly, emphasizing that the TSA remains a critical tool in achieving financial prudence.
Why the Treasury Single Account is Critical
The TSA system is designed to ensure that all government revenues are pooled into one account, making it easier to track public funds and reduce the risk of diversion or misappropriation. Before the introduction of the TSA, MDAs maintained multiple accounts across various commercial banks, which often led to inefficiencies and corruption.
The Central Bank of Nigeria will oversee the transition process and provide technical support to state governments to ensure smooth implementation. Furthermore, financial institutions affected by the directive are expected to collaborate with the government to ensure compliance.
Impact on Commercial Banks
Commercial banks, which have historically managed significant portions of government funds, are likely to experience a reduction in their deposit bases due to the policy’s expansion to state-level MDAs. Analysts predict that this could have short-term effects on the banking sector’s liquidity, but the long-term benefits for the public finance system far outweigh the immediate impact.
While the directive may tighten cash flow for commercial banks, it represents an important step toward strengthening Nigeria’s fiscal framework. The adoption of the TSA policy at the state level will not only enhance transparency but also help state governments improve service delivery by optimizing their financial resources.
Compliance and Support
The FG has called on state governments to prioritize the implementation of the TSA and seek guidance where necessary. Workshops and training sessions are expected to be organized to facilitate the transition and build capacity among state finance officials.
This development underscores the government’s commitment to fiscal reform and financial discipline. If properly implemented, the extension of the TSA to state-level MDAs could significantly improve Nigeria’s fiscal landscape and set a new standard for public sector financial management.
Conclusion
The directive for state MDAs to close accounts in commercial banks marks a critical phase in Nigeria’s ongoing fiscal reform agenda. By extending the TSA policy to state governments, the Federal Government aims to ensure greater accountability, reduce inefficiencies, and promote transparency in public finance management. Stakeholders are advised to follow the transition closely and prepare for the changes ahead.
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Source : Swifteradio.com
