Govt secures funds from CDNS dormant accounts to cut fiscal deficit

ISLAMABAD: Government has wringed Rs18 billion from dormant accounts of its Central Directorate of National Savings (CDNS) to include the amount into nontax revenue in a bid to cut the tally of fiscal deficit for the last fiscal year, sources said on Tuesday. 

Initially, the sources said the amount lying into dormant accounts of CDNS stood at Rs24 billion, including principal and mark-up piled up during the last several years. Government published advertisements into national dailies and subsequently the claimants came forward to claim Rs6 billion.   Unclaimed amounts, therefore, came down to Rs18 billion.

Economists wondered that how government could claim unclaimed amount as nontax revenue. The government is making last-ditch efforts to reduce the budget deficit in order to demonstrate that fiscal discipline was the top most priority even after the expiry of International Monetary Fund-sponsored programme. 

One top official told The News that no violation was committed on this account as all the formalities and procedures were followed for treating the amount of Rs18 billion as nontax revenue receipts.

The official said the State Bank of Pakistan used to follow the same procedures related to banking accounts which remained unclaimed for around 10 years. Government followed the same path and advertised in national dailies for at least two weeks for asking the account holders to contact CDNS with valid documents for getting their due amounts. 

“After publications of advertisements, a couple of thousands account holders approached the CDNS from different cities and towns and obtained Rs6 billion,” the official said.  Besides, he added that Rs18 billion is not so big to show reduction in budget deficit.

The country’s fiscal deficit was feared to reach 5 percent of GDP against the desired target of 4.3 percent for the last fiscal year ended June 30, 2017 after the reconciliation exercise.   The budget deficit stood at 8.8 percent of GDP when the Nawaz government took reins of power in 2013. In the past four years, the deficit was brought down to less than five percent.

A CDNS official said operation of national savings scheme largely remains manual despite hefty efforts.  “So such dormant accounts might be utilised for fraudulent activities,” the official said. “Keeping this in view, the government has booked this amount which could be claimed by genuine account holders or their heirs by pressing valid documents.”

The official, however, added that the directorate is going through modernisation to improve internal systems and processes for better customer services. 

CDNS is an attached department of ministry of finance with more than seven million customer accounts and 376 branches nationwide. It offers saving products from three-month to 10-year tenure. 

Recently, the government amended CDNS rules to mitigate the risk of misuse of dead accounts and certificates.  The official said CDNS ran an aggressive awareness campaign about dead accounts/certificates in 24 leading regional and national dailies across the country for more than three weeks, and ample time was given to the investors to reactivate the accounts/certificates. During this period and by the time dead accounts/certificates were made effective, around 20 percent of the dead accounts/certificates were actually reactivated.

Earlier, a committee led by former finance secretary Abdul Wajid Rana, advised the government to set up a fund for these dormant accounts.  Critics said government used to discard liabilities to show performance of fiscal account. 

Recently, government sold certain responsibilities of its Security Printing Corporation for publishing currency notes and coins to State Bank of Pakistan against Rs100 billion, which was also treated nontax revenue. A cash gift from Saudi government of Rs64 billion was also put into the account of nontax revenue for the last fiscal year. The government procured two power plants with the fund.