THE DEPARTMENT of Finance (DOF) has ordered national agencies, local governments as well as state-run corporations to deposit funds only to government financial institutions.
“For agencies specifically allowed by law, rules, and regulations to retain income and/or for operations and/or working balances, the deposit of government funds by national government agencies, GOCCs [government-owned and/or -controlled corporations] and LGUs [local government units] is limited only to government financial institutions with a universal bank license and a Camels rating of at least 3,” under Department Circular No. 001-2015 issued by Finance Secretary Cesar V. Purisima last June 1.
In a statement on Saturday, the DOF said such move was “part of the strategic direction to strengthen the overall fiscal position of the country.”
“As part of the continuing reforms being accomplished on the public finance front of governance, we believe that it is imperative for government deposits to be placed in the strongest government financial institutions. By applying this high standard, we ensure that taxpayer money is safeguarded to the fullest extent,” Purisima explained.
As a whole, the DOF circular provided the revised guidelines on authorized government depository banks.
Another revision to the guidelines highlighted the use of the Treasury Single Account (TSA) system, which is aimed at improving spending agencies’ operational efficiency to minimize treasury operations costs.
The TSA system was also to be integrated to an automated Public Financial Management (PFM) reforms program of the national government.
“The ongoing implementation of the TSA system is a synergistic innovation that brings together government bank accounts into a single unified structure, improving our cash management system by consolidating resources and optimizing its use,” Purisima said.
“By enabling the national treasury to determine how much money it has in real time, the TSA allows it to make better decisions on treasury operations, reducing costs in the process,” the Finance chief added.
According to the DOF, the other revisions to the guidelines include changes in documentary requirements, new conditions for exemption, and also a clarification of the DOF-attached agencies’ roles in terms of managing government funds.
The circular emphasized that the Bureau of the Treasury would oversee national government agencies, while LGUs would be served by the Bureau of Local Government Finance.
GOCCs, meanwhile, will be under the direct supervision of the DOF.