Govt. introduces temporary cost-cutting measures

Choki Wangmo 

In what is a major fiscal measure to cough up the cost of recurrent expenditures from internal resources in Covid-19’s wake, the government announced temporary changes in budget policies.

The government would rationalise in-country and ex-country travels, defer leave travel concession (LTC) payments towards the end of the fiscal year except for those completing terms or superannuating until the revenue performance improves which is estimated to drop by 14 percent as compared to the last fiscal year.

Other measures include postponing the activation of salary indexation to the next fiscal year, not paying transfer benefits to civil servants and not hiring private buildings for office space.

While presenting the national budget for the year 2020-2021 at the National Assembly yesterday, the Finance Minister Namgay Tshering, said that as the internal resource would not be able to meet the cost of recurrent expenditures as mandated by the Constitution, there are no other means than to implement the fiscal measures.

The government would also defer the option to monetise vehicle quota during the fiscal year without affecting the date of next allotment. Monetising the vehicle import quota for public servants was recommended by the fourth pay commission last year to reduce imports, ease traffic congestion, and promote the use of public transport besides minimising tax leakages.

Civil servants Kuensel spoke to largely support the government’s fiscal measures. A civil servant said that the government could restrict transfer orders for the time being unless deemed urgent. He said that LTC and salary increment might not be possible given situation and it won’t make a difference to the lower income group who are the most affected.

Another civil servant said the initiative required collective responsibility, and tackling the virus should be a priority rather than monetary benefits. “Giving up this little amount won’t make any difference. Everyone, including His Majesty The King and frontline workers, is working hard for the country’s safety.”

Lyonpo said that further rationalisation would be carried out if the revenue performance falls below the estimates. But if the revenue performance improves, the aforementioned policy measures will be relaxed.

One of the significant reforms is the provision of the current budget in the form of annual (block) grants from the fiscal year 2020 to 2021 to all budgetary agencies. The reforms would, Lyonpo said, promote ownership in the optimal utilisation of the allocated budget for priority activities by budgetary bodies, besides ensuring accountability.

Hereafter, the budget allocated to the dzongkhags and thromdes will be referred to as annual grant for dzongkhags and thromdes, and the existing practice of dzongkhag development grant will be discontinued.

The grant consists of mandatory and controllable expenses.

Salaries and wages, stipends, medical benefits, rentals, international subscriptions, and interest payment are categorised under mandatory expenses, and the budget is provisioned on an actual basis.

Controllable expenses such as supplies, utilities, and maintenance are provided as a lump sum to ensure flexibility to budgetary agencies in optimising the use of the current budget. The government would issue guidelines for annual grants.

The budget for 2020-2021, themed  ‘Economic Resilience and Transformation’, aims to intensify and accelerate the implementation of the programmes and activities.

To facilitate acceleration and front-loading of the 12th Plan, 31 percent of the capital outlay has been provisioned for the fiscal year, one of the highest allocations compared to past Plans. The allocation is expected to increase the incorporation of economic contingency plan activities, mostly funded through external sources.

Although external grants have been frontloaded to improve fiscal deficit, the deficit is at seven percent against the target of five percent of the Gross Domestic Product.

The third session of the third Parliament resumed yesterday.

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