Increasing hospitality and entertainment (HE) expense is a burden on current expenditure, sometimes causing resource gaps, as it is met from domestic revenue.
Figures from finance ministry’s annual financial statement indicate that more than Nu 140M was spent every year on HE. In 2016-17, the expenditure on HE was Nu 142.01M.
While the Prime Minister, National Assembly Speaker, Chief Justice of the Supreme Court, cabinet ministers, National Council chairperson and Opposition Leader receive the actual amount spent on HE, drangpons of the Supreme Court, Attorney General, Chief Justice of the High Court, government secretaries, head of constitutional offices avail Nu 160,000 for HE.
Head of departments, directorate, missions, consulate, dzongdags, thrompons and drangpons of High Court and members of the constitutional offices get Nu 80,000. Drungkhag drangpons and heads of regional offices get Nu 30,000. Gups are paid Nu 10,000 for HE.
The HE budget is exclusive of the annual discretionary grant parliamentarians; the ministerial-level officials and dzongdags receive. The Prime Minister receives Nu 300,000 a year, the ministers and equivalent post holders Nu 200,000, MPs Nu 100,000, and dzongdags Nu 50,000 as discretionary grant.
It is the HE expenses for ministerial-level officials that eats into the government budget and leads to an increase in HE expenses, as there is no limit to the entitlement.
A budget officer said that with the actual expense arrangement, a huge amount of government fund, which could be otherwise used for some activities are spent on HE.
“With the audit findings issued in 2017, the finance ministry drafted some guidelines for HE, but it was never implemented,” he said.
An auditor explained that increasing expenses on HE directly impacts the Plan budget, as adjustments have to be made from other budget. “In some cases, HE expenditures are met from savings of project accounts.”
The Royal Audit Authority, after auditing the HE expenses of 2015-16 pointed out that the finance ministry should revisit the rationale behind the institution of the discretionary grant vis-à-vis HE budget for prudent and judicious use of scarce public resources. This was because most of the actual expenses on donations, offerings, semso, tips, soelras and nyendars were discretionary in nature.
It also pointed out lack of accountability and transparency in the use of fund, occurring mostly due to the absence of clear guidelines, rules and regulations and budgetary controls in place. “Development of clear guidelines, defining intent and purposes of the fund, specifying limits on expenditure supported by accountable and transparent processes would contribute towards prudent and judicious use of resource allocated by the Parliament.”
While the HE expenses for ministers and equivalent ranks were Nu 491.80M in 10th Plan and Nu 650.681M in 11th Plan, most expenses were made on chagoep and nyendar, followed by soelra, contributions and semso.
A former auditor explained that increasing HE expenses have direct correlation to how the finance ministry manages government budget, as there are times when government consolidated account (GCA) runs into negative and it is adjusted through a system called ‘Ways and Means’ from the Royal Monetary Authority through payment of interest.
“We have extravagant expenditures on one hand and finance ministry borrowing in the form of Treasury Bills and Ways and Means on the other,” he said. “The source of financing for the increasing HE expenses is mostly from planned budgets.”
He explained that when the budgets are used on travels, hospitality and entertainment, the resource gap widens, resulting in perennial dependence on short-term borrowings from RMA and banks paying huge interest.
Meanwhile, finance minister Namgay Tshering last week said the ministry is working on some guidelines.
Prime Minister Dr Lotay Tshering said while the finance ministry officials made a presentation of the guidelines, he asked them to justify the budget limit.
He said that it is difficult to understand how the HE budget has to be adjusted if it is unlimited. “Definition of HE expenses is unlimited. So where is this shortage coming from? I don’t understand it.”
The Prime Minister also said he didn’t want to know how it was done by the predecessors. “They must have done with a good reason. The media is only looking at the HE expenses from one lens, that it is being misused,” he said.
“The bigger lens is missed. Was it used for nation building? Did HE help the minister or the equivalent post holder function more efficiently? Did it bring in more value to his position and functioning and help in nation building? No one is asking that.”
Lyonchhen explained that whatever Prime Minister has to spend after assuming the office has to be spent from HE budget. “But one thing I will make sure is that the money will not be used for my personal use. Not a single penny would be used in my constituency.”
He said that as long as he doesn’t misuse it, it is what he is entitled to. “Come towards the end of this government’s tenure, use the same window and come out with a different article from 2022 to 2023,” he said.
The Prime Minister said he has no problems with the HE budget as by definition, it is at the discretion of those who receive it.
On the limit finance ministry proposed, Lyonchhen said that the government has no problem. “If you feel the ‘cap’ is not required, the ‘cap’ should be on your morality.”
Prime Minister, however, said the purpose of the HE has to be questioned if it has to be capped. “I told finance ministry officials to do as they like. What I don’t want at the end of the day is being penny wise, pound foolish.”
Meanwhile, Lyonchhen said he offers his own nyendar and had done away with giving ‘tokha’. “I am not setting any standards. I cannot force my cabinet members to follow me and restrict them. It has to be left to intellectual capacity, authority and morality of a person.”
The Prime Minister assured that his Cabinet members would not misuse the HE budget. “I will ensure media get the details of how it was used.”