100 percent budget utilisation misunderstood: PM

There is a misconception among the government agencies that 100 percent budget utilisation tantamount to full exhaustion of the released budget.

During the mid-year review of the Annual Performance Agreement (APA) of the central agencies on February 7, the Agriculture Secretary Rinzin Dorji presented that 100 percent budget utilisation is practically difficult.

Likewise, the economic affairs ministry had issues with this target.

However, budget utilisation is a mandatory indicator for all the agencies and 100 percent utilisation is given a rating of ‘excellent’. Anything below 100 percent is rated ‘poor.’

Prime Minister, who chaired the review meeting, clarified that if the activity or a project is completed at a cost lesser than the allotted budget, it would be considered 100 percent. “Because the task for which the budget is allocated has been achieved, agencies should return the excess amount, which could be used for other important activities.”

He said that often, when there is excess budget left, officials plan tours and procures things that are not necessary because of the misconception that 100 percent utilisation means that the agencies will have to exhaust all allocated funds.

Finance Secretary Nim Dorji also said that budget for all the agencies are aligned with APA targets. Agencies should first draw their APA targets and then propose budget accordingly.

He said that after the Parliament passes the budget, if budget is not allocated for certain activities, then it should be taken out of APA.

Prime Minister commended the finance ministry for releasing the budget on time, particularly current expenditure.

“Had there been scarcity and untimely release of capital budget, it is not finance ministry’s fault, but government’s failure,” he said.

While the source of domestic revenue is limited to taxes, Lyonchhen said the country has a small taxpayer base. “But there is annual increase in domestic revenue and tax collection,” he said. “This means the tax collection process is streamlined.”

Finance ministry has also redefined and updated the value of essential imports. Nim Dorji said that essential import consisted of goods required for sustenance of livelihood such as rice and oil in addition to basic requirement of economic activities.

The macroeconomic coordination and management committee in November included debt servicing as a part of essential import. From USD 450M, the value of total essential import was revised to USD 500M.

Prime Minister said that debt servicing is not import in the real sense. “Nonetheless, it is important,” he said, adding that the country has double the amount of essential import in its foreign currency reserve.

Finance ministry, in the meanwhile, has achieved seven success indicators of the 33. None are at risk.

Tshering Dorji

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