Temporary cost-cutting measures to save Nu 3B

Choki Wangmo 

In the wake of Covid-19, the government has proposed temporary cost-cutting measures in the 2020-21 budget, which if the Parliament approves could save about Nu 3 billion (B).

Major cost-cutting measures include rationalising in-country and ex-country travels, deferring leave travel concession payments, and transfer of civil servants without benefits, among others.

In response to Khar-Yurung’s member of the Parliament, Tshering Chhoden’s suggestion to reconsider transferring civil servants without benefits, the Finance Minister Namgay Tshering said that in view of the current situation national interest rides all other priorities.

Tshering Chhoden said that the government could defer transfer benefits like the leave travel concession (LTC) payments to reduce inconvenience to civil servants as transfers are usually on medical grounds or owing to family problems.

Lyonpo said that transfer grant in the form of transport costs was insignificant to individuals but would make a difference in reducing the government expenses.

“The fiscal measures are temporary and are bound to change according to revenue performance,” he said.

The cost of recurrent expenditure should be made through internal resources, as mandated by the Constitution. But the country’s revenue performance is estimated to drop by 14 percent compared to the last fiscal year.

Lyonchhen Dr Lotay Tshering said that the current drop in revenue was first of its kind in Bhutanese history as the impact of Covid-19 is felt across different sectors of the economy.

Considering the dangers of external borrowing, Lyonchhen said that internal budget adjustment was necessary.  “If we don’t change the budget policies, then we might have to downsize the civil servants, which would have a grave impact on their livelihood.”

Last year, the country’s recurrent expenditure was Nu 35.9B.

Of Nu 32.9B for the year 2020-21 fiscal year, 56 percent is allocated as pay and allowances, 16 percent in operation and maintenance like electricity, water, internet charges, papers for offices, 21 percent as subsidy for state-owned enterprises and 6 percent in payment of external debt.

“The payments are mandatory expenses and we cannot make adjustments,” said Namgay Tshering.

The National Assembly’s budget deliberation ended on June 8 and re-deliberation will begin from June 16.

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