Malawi govt opt for Treasury Single Account to curb misuse: New IFMIS full roll out in 2021

Finance Minister Felix Mlusu says  the Tonse Alliance administration has resolved to consolidate multiple bank accounts operated by their ministries, departments and agencies and keep their revenues in Treasury Single Account  each as part of efforts to curb abuse of public funds.

Finance Minister Mlusu  (r) said the move will reduce the number of government accounts.

Delivering a budget statement for 2020/21 in Parliament on Friday, the Treasury Czar said government has numerous bank accounts which are difficult to manage which  affects precision of Government cash position at any given point in time.

He said such a structure is costly due to numerous bank charges incurred on the accounts.

Mlusu announced that in the 2020/2021 fiscal year, government will establish a Treasury Single Account to ensure proper oversight of government cash flows and to reduce the cost of keeping public money in several commercial banks.

Explained Mlusu: “This, Madam Speaker, does not necessarily mean having one bank account, but it is rather a unified structure of bank accounts where Government resources are pooled and treated as fungible.

“A Treasury Single Account would provide a consolidated cash position with a clear overview of all cash flows in and out of the accounts.”

The minister said if a country has a fragmented system for handling government receipts and payments through the banking system, it is a critical Public Finance Management weakness that needs to be addressed.

“A country with fragmented government banking arrangements pays for its institutional deficiencies in multiple ways. Firstly, Madam Speaker, idle cash balances in bank accounts often fail to earn market related remuneration.

“Secondly, Government, being unaware of these resources, incurs unnecessary borrowing costs on raising funds to cover a perceived cash shortage. Thirdly, idle government cash balances in the commercial banking sector are not idle for the banks themselves, and can be used to extend credit, including to Government itself. Draining this extra liquidity through open market operations also imposes costs on the central bank,” he said.

Mlusu also reported to Parliament that as part of strengthening Public Finance Management Systems,  the government through the Department of Accountant General rolled out the  new Integrated Financial Management and Information System (Ifmis) on 1st July, 2020.

The new Ifmis replaces the old version of the software Epicor 7.3, which was due for upgrading since it was installed in 2005.

“The roll out has been done in a phased approach where 10 selected votes and modules were identified as part of the pilot phase,” said Mlusu.

He said the neww IFMIS is a key reform in Public Finance Management and pivotal to the efficient and effective accounting and financial reporting functions in Government.

“ Its full rollout is expected to be done by 1st July, 2021,” said Mlusu

Findings by British forensic auditors Baker Tilly in 2013, established that the old Ifmis was grossly abused, especially by lower management accountants in the civil service, resulting in the plunder of K23 billion.

The Malawi Government has spent about K5 billion on the new Ifmis whose supplier is Twenty Third Century Systems, which also works in Zimbabwe, Zambia, South Africa, Mozambique, Tanzania, Kenya, Uganda, Rwanda and Nigeria.

The system also introduces the automation of employee loan management that will enable recording and management of loans, which is currently done manually and that every month after deductions are effected, the loan record will be updated automatically.

Mlusu presented his first substantial budget that has been developed under the theme “Living The Promise” during the 49th meeting of first session of parliament.

This projected total expenditure for the coming fiscal year is about 30.6 percent of the country’s Growth domestic Product (GDP) and representing an increase of around 22.9 percent from the 2019/2020 preliminary expenditure outturn.

He said the K2.190 trillion budget focuses on achievement of sustainable and inclusive growth, macroeconomic stability and sound financial management.

Follow and Subscribe Nyasa TV :

Sharing is caring!

0 0 vote
Article Rating
Subscribe
Notify of
guest
6 Comments
newest
oldest most voted
Inline Feedbacks
View all comments
Khamani!!!
Khamani!!!
4 days ago

Good luck reconciling that account …. it depends on what basis those numerous accounts were created ( functional / geographic etc ) …. but a single account is very hard to reconcile and if you are not reconciling your account – you could be concealing fraud .

Last edited 4 days ago by Khamani!!!
Zio ine
Zio ine
5 days ago

This may help the thieves at auditor general who make multiple allowance claims from different government agencies and departments. There is an allowance scheme operated by officers from the accountant general and auditor general. These departments receive their funding for their operations yet when they are going out to conduct auditing, they will claim allowances from their office as well as from the department or agency they intend to audit. Most times they will claim for more days even if the work will only take few days. You can catch these thieves by requesting all agencies and departments to submit… Read more »

Yalakwa 4
5 days ago

I like the ‘fungible’ money. ]..i just need to steal more..[

Ezekiel njobvu
Ezekiel njobvu
5 days ago

The first step is to put in your own internal control system before you start stealing. Mcp cannot steal with dpp system so they are tweaking the system to suit their style of stealing. Kamuzu also had single account and everything in that account was technically his.

The Apostle
The Apostle
5 days ago

The thoroughness of the analysis by the Minister of Finance and the strategy laid out for all fiscal policies is just impressive.

A bongololo enawa azingolilalilabe but ask any objective observer and they will tell you that this sort of comprehension of monetary matters, instruments and systems is the creme de la creme of highly experienced and educated financiers.

Can you picture Mwanamveka clearly articulate monetary issues this way?

Bravo Honourable Minister!

Last edited 5 days ago by The Apostle
Nyabanda
Nyabanda
4 days ago
Reply to  The Apostle

That is a good move to stop abuse of the tax payers money

shares
6
0
Would love your thoughts, please comment.x
()
x
Read previous post:
Nankhumwa unveils 2 aspirants for DPP primaries in Phalombe North by-elections: Upbeat of win

The main opposition Democratic Progressive Party (DPP) Vice President for the southern region Kondwani Nankhumwa has said a DPP candidate...

Close