Tue | Aug 14, 2018

Jamaican government has dormant, inactive accounts too

Published:Friday | June 2, 2017 | 12:00 AM

It is now common knowledge that ordinary commercial bank depositors, whose accounts become dormant or inactive, are faced with having their savings transferred to the Consolidated Fund, the Government's main bank account, as unclaimed balances.

While ordinary consumers stand to lose because of their inactivity, the Government benefits when it allows its own funds in those banks to become inactive or dormant.

That is illustrated in the preamble to the financial statements of the Consolidated Fund for the year ended March 31, 2017, which said the Government will continue to close dormant and inactive accounts held by various ministries, departments and agencies, an exercise it started in December 2016.

It said accounts in which Government of Jamaica (GOJ) funds are held, once confirmed dormant or inactive, were closed and the balances eventually transferred to the Consolidated Fund, an exercise it said is continuing.

According to the preamble, the Government, in response to demands for more performance and accountability from the public sector, took steps to increase the confidence of citizens and investors by improving public financial management, especially in the areas of cash management.

The result was the implementation of a Central Treasury Management System (CTMS) geared towards improving the Government's financial management and budget process, thereby creating greater efficiencies.

Before the CTMS, it said, government cash resources were fragmented and spread across thousands of accounts in the commercial banking system.

The statement said that at any given point in time, there were hundreds of millions in cash owned by the Government in those splintered and stand-alone commercial bank accounts.

"Very often when in need of cash to fill short-term gaps, the GOJ would seek short-term financing from the commercial banks, borrowing its own money at commercial bank rates," it said.

"This was so as the Government had no knowledge of the extent of its cash resources, and, by extension, had no full control of its cash resources," according to the financial statements tabled by Minister of Finance and the Public Service Audley Shaw in Parliament on Wednesday.

It said that consequent on the approval of the CTMS, in 2010 action was taken to close all non-revenue accounts in the commercial banks held by ministries, departments and agencies. Thus began the process of cash consolidation as bank balances were transferred to the Consolidated Fund.

The statement said that with the commercial bank accounts into which warrant funds were once deposited now being closed, all payments by ministries, departments and agencies to staff and suppliers for goods and services are now done by the Treasury through the central payment account, one of those under the Treasury Single Account.

The CTMS enables cash resources of the Government and public bodies to fall within the Treasury Single Account, which comprises a suite of accounts at the Bank of Jamaica, but up to the end of March 2017 the resources of public bodies were not included in that account.

In Jamaica, deposits in commercial banks which are classified as dormant are transferred to the Government as unclaimed balances after 15 years.