Govt Prepares for Austerity Budget

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Govt Prepares for Austerity Budget

With the Covid-19 pandemic and lengthening lockdown putting a big dent on revenue collection of the government, the Ministry of Finance (MoF) is preparing to introduce austerity measures in the federal budget for the fiscal year 2020/21. At a time when managing revenue resources has become much more challenging and people are looking for government support, the ministry, which is in the final stage of drafting the budget, is preparing to axe allocation of budget under different headings that have been deemed unnecessary. According to high officials at MoF, the ministry will drastically cut a range of unproductive spendings from vehicle purchase and repair to employee allowances under different headings and implement past recommendations of Public Expenditure Review Commission and High-Level Administrative Reform Implementation and Monitoring Commission.  

Sources say that duplication in expenditure headings including agriculture subsidy and social security allowances will be removed in the upcoming budget. “Right now, the government has limited resources. We have to address the expectations of many at this time of crisis. So, we will not include unfruitful programmes in the upcoming budget,” the official told New Business Age. According to him, budget of programmes bearing names of President and Prime Minister will also be reduced. The ministry has planned to mobilise foreign resources to develop health, agriculture, employment and other long-term infrastructures. “But we will refrain from additional fiscal burden,” he said.  

It is certain that the government will broadly miss its revenue target for the current fiscal year. The revenue collection till May 22 has totaled Rs 612 billion against the target of Rs 1,112 billion set for FY2019/20.  The data published by the Financial Comptroller General Office (FCGO) shows that the government, which aimed collecting Rs 900 billion in revenue by the end of Baisakh, has just collected 55.11 percent of the target. This clearly indicates the pressure the government is facing in terms of managing resources.

Experts also stress of the necessity to drastically cut government expenditure at a time when the country’s economy has been surrounded by unprecedented headwinds due to the Covid-19 crisis.  Former secretary Bimal Wagle say that while it will not be possible for the government to reduce the number of civil servants and security personnel for the time being, it can lower the number of politically appointed individuals. “The post of advisor at the Prime Minister Secretariat is not a necessary one. Simialrly, members of parliament do not need personal secretaries. If these posts occupied by politically appointed people are abolished, the government can save a lot of money,” he said.  According to him, cutting down billions in unnecessary employee allowances and putting a stop to programmes that are run by forming consumer committees and avoiding same work by multiple government staff will help to general internal financial resources.

According to former National Planning Commission member Dr Dilli Raj Khanal, the government can generate huge resource just by implementing the recommendations of the Public Expenditure Review Commission.

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