Finance ministry estimated domestic revenue of Nu 37.053-billion for the current fiscal year 2022-23
To rationalize non-priority expenditure in the current fiscal year 2022-23, the finance ministry has asked all the budgetary bodies to maintain a recurrent budget within the estimated domestic revenue.
The ministry issued a budget notification in this regard on 4 July in the context of the present financial situation and the consequent pressure on government resources in the wake of the economic downturn due to the pandemic.
The Constitution mandates all recurrent expenditure must be met from domestic revenue and it is adequate only to meet the recurrent expenditure during this fiscal year.
The ministry has estimated domestic revenue of Nu 37.053-billion for the fiscal year where the parliament approved the recurrent expenditure of Nu 36.34-billion, which accounts for 44 percent of the total budget of this fiscal year, from the total expenditure of Nu 74.807-billion.
And the fiscal deficit is projected at Nu 22.882-billion, which is 11.25 percent of the gross domestic product. It would be financed through concessional external- and domestic borrowings.
With this in mind, it asked all budgetary bodies to take proactive measures to review and spend every amount of monies allocated wisely, exercise prudence with strong financial discipline to avoid cost overruns, and unnecessary spending, prevent financial leakages and drive cost efficiencies and productivity savings in all our expenditures.
Further, it asked all heads of the budgetary bodies to ensure that the critical operational expenses are adequately prioritized from the controllable budget and discourage non-essential expenses to the best possible extent.
While protecting and preserving priority expenditure, the collective measures are expected to contribute to achieving maximum returns from the capital investments and maintaining a recurrent budget within the estimated domestic revenue.
The notification mentioned that the heads of budgetary bodies will be responsible for managing the financial and related matters including the procurement and disposal of assets as per the provisions under the Public Finance Act, 2007.
“The Finance committee (FC) shall continue to play a pivotal role in strengthening the public financial management and promoting financial thrift by enhancing efficiency in the use of public resources,” it stated.
Expenditure rationalization measures
It has asked to rationalize travels for both ex- and in-country within the allocated budget. Hiring private buildings for office space and new establishments for the fiscal year is restricted.
Besides, there will be no activation of salary indexation till the revenue performance improves, and civil servants will not get transfer benefits, while the option to monetize vehicle quota will be differed without affecting the date of the next allotment.
In addition, it also mentioned the suspension of the daily subsistence allowance of Nu 2,000 a day for all in-country training. However, the participants will be eligible for travel allowance and daily allowance based on the admissibility as per the rules.
”These measures are intended to promote fiscal discipline, without restricting the operational efficiency of the government functionaries,” reads the budget notification.
However, any re-appropriation and supplementary incorporation of funds under capital expenditure measures can be sourced upon approval from the government or the Cabinet.
These include new constructions and major renovations, procurement and replacement of pool vehicles, furniture, equipment, and computers with exceptions to educational institutions and health facilities, among others.
It will also centralize the payment of the internet charges through the Department of Information Technology and Telecom (DITT) starting July this year.
The government advises to put on hold the creation of new establishments and positions until the ongoing reforms and transformation initiatives are finalized.
Further, it also discourages non-essential imports and prioritizes domestically produced materials for works and goods to the extent possible.