A pool account or a single account?
An omnibus bill has brought “treasury single account” discussions to the forefront and reminded the country of some past practices at the same time.
One such practice is the “pool account system,” which was on the government’s agenda during the Welfare/True Path Party coalition period (1996-7).
In “the pool account system,” there is a single account practice in the treasury for public institutions, but state economic enterprises (SEE) - called “KİT” in Turkish - are also included in the system’s scope. I think this is why it is called a “pool account.”
Deputy Prime Minister Mehmet Şimşek said they had considered this option in order to make public cash management more effective, citing examples from other countries such as Australia.
However, bringing this kind of account system to the agenda creates a sense of “difficult days ahead in the economy.” Many bankers, who mention similar examples in the past, would interpret the move as a signal of economic problems and hardships in cash management.
I think the anxiety it would generate would outweigh any potential benefits.
The “pool account system” has long been on the agenda of economic journalists. It was discussed during the Welfare/True Path Party coalition period and was perceived as a political decision. Even though back then some said this system would provide considerable savings, the result was clear. Unsuccessful economic management during that period triggered multiple economic crises in Turkey.
The discussion is not a new debate for the current government. The “pool account system” was discussed during the ruling Justice and Development Party’s (AKP) first few months in government, but was not put into practice.
The fact that it is being discussed again at a time when external resources are limited and officials are trying everything to maintain growth until the next elections generates anxiety.
Young bankers may not remember this, but many funding packages were announced during the Welfare/True Path Party coalition period, and some “bright ideas” were put into practice, but none of them had any visible positive results. The “pool account system” was one of them, but that period was a fiasco from a financial perspective.
Now Şimşek is trying to bring this idea forward, shaping it to fit current market conditions, though I think he knows that effective cash management is already possible within the scope of the current “treasury single account” system.
Şimşek also stressed that funds and state economic enterprises would be included in the scope step by step while municipalities would not. It would be pointless to include the Privatization Fund, which has significant financial hurdles, if funds that have actual resources such as the Saving Deposit Insurance Fund (TMSF) are not included.
Another question is how to distinguish between good and bad managers of state economic enterprises. If resources of a profitable enterprise are used for an unprofitable enterprise, should we call it increasing or reducing the effectiveness in cash management?
In short, if the economy were managed well and there were no shortage of cash, there would be no point considering such a solution. This is how bankers and foreign funds will interpret the situation, which will worsen the overall perception rather than produce positive outcomes.