Question 8 (10 pts) Five years ago, the country Hybria announced t was determine

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Question 8 (10 pts) Five years ago, the country Hybria announced t was determined to introduce a Treasury Single Today, the following situation now exists in the country: commercial banks are used by the federal government to make payments and receive funds in a variety of accounts. The central bank generates a consolidated statement once a month and 20 business days after the end of a month. State-owned enterprises and ministries and agencies of "national interest" are not consolidated. An integrated financial statement system is being developed. The government has paid $7 million in late fees and $40 million in overdraft loans. The exact number of open accounts is not known, but estimated to be less 3,000 (down from 30,000 five years ago). Last month it has decided to allocate 10% of its cash assets as of six months ago in a private equity fund intended to be invested in blockchain start-ups for the prospect of high returns. Based on this information, please share your assessment whether the country has made substantial progress in the implementation of a Treasury Single Account or how you arrive at your conclusion. Use as many points you can make by referring to the information provided above.

Explanation / Answer

Treasury Single Account is a unified structure of government bank accounts. This structure gives a consolidated view of the cash resources of the government. Treasury Single Account is based on the principle of unity of cash and the unity treasury. In other words the government should transact all its receipts and payments through a treasury single account – a bank account or a set of linked accounts.

From the information provided about the country Hybria I can say that the country has made substantial progress in the implementation of Treasury Single Account but it is not fully there. It has a set of linked accounts i.e. the various accounts that are used by federal government to make and receive funds. Secondly an integrated financial statement system is being developed. As per principles of Treasury Single Account all inflows from all agencies have to be consolidated into a single account with the country’s central bank.

In terms of what need to be done more is that the government should estimate the exact number of open accounts and should further bring it down. This will also help the government to reduce its borrowing costs in the long run.

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