Can the Central Bank Release Payments from Account No. 1?

Serious questions have emerged over the operation of Pakistan’s Federal Consolidated Fund (FCF), commonly known as Account No. 1, after it was revealed that various courts have ordered attachments of the fund in 43 cases since 2017, resulting in the withdrawal of Rs. 3.5 billion. Despite clear constitutional restrictions, sources claim that the State Bank of Pakistan (SBP) has released funds from Account No. 1 without the approval of the Ministry of Finance or the National Assembly, a move experts describe as a serious violation of the Constitution. Earlier, ProPakistani reported that billions of rupees may have been illegally siphoned from the Federal Consolidated Fund without proper authorization. The latest revelations indicate that the practice continues under the pretext of complying with judicial compensation orders. The Peshawar High Court recently suspended a lower court’s order from Nowshera that sought to attach the FCF, highlighting increasing judicial scrutiny over the issue. Sources told ProPakistani that they have uncovered an organized scheme operating under the guise of compensating victims of natural disasters and traffic accidents. In these cases, certain groups allegedly approach grieving families, file cases using their names, and obtain compensation orders without notifying or involving the federal government. Sources claim that the SBP has been allegedly executing these court orders without verifying their legality or seeking mandatory federal approval, effectively enabling unauthorized withdrawals from the national treasury. Rawalpindi has reportedly emerged as a hub for such questionable claims, with dozens of suspicious cases resulting in illicit transfers from the FCF. Under Article 78 of the Constitution, no money can be withdrawn from the Federal Consolidated Fund without approval from the National Assembly. Additionally, the Public Financial Management (PFM) Act, 2019 is explicit: The Finance Division has exclusive authority over the operation of the FCF and the Public Account. No expenditure can be incurred from the FCF unless sanctioned by a competent authority and provided for through: the schedule of authorized expenditure, a supplementary grant under Article 84, or a technical supplementary grant or re-appropriation. The PFM Act further states that no public money can be transferred or deposited outside Government Account No. 1 without prior federal approval. Every grant or financial sanction expires at the end of the fiscal year. Any unapproved spending constitutes excess expenditure, which can only be regularized by National Assembly approval, recovery from responsible officials, or disciplinary action against the principal accounting officer.