Govt cuts back on travel expenses to free up funds for priority sectors
The government has gone one step further to tighten its belt amid drying up of revenues as it suspended 50 per cent budgetary allocation for the expenses for both foreign and local tours of officials and banned all routine travels.
The move would be applicable for all travel expenses under operating and development budget of the government, semi-government, autonomous and other agencies.
In a circular yesterday, the finance ministry banned all routine travels. Half of the budget set aside for the category in the current fiscal year would be on hold. Funds can be allocated for the travels that are inevitable, the notice said.
The government has allocated Tk 2,200 crore to pay for the expenses for foreign tours for its officials in FY21, up from Tk 2,130 crore a year ago, said an official of the finance ministry.
"It is encouraging to see the finance division's proactivity in identifying sources of expenditure savings that will not hurt service delivery and implementation of high priority development projects. Travel is one such source," said Zahid Hussain, a former lead economist of the World Bank office in Dhaka.
"It will also help give more clarity to what will be considered essential and urgent travel or else most travel may be claimed as essential and urgent by those who want to travel," he said, adding that the suspension should continue throughout the year.
The move came as the government looks to ensure the best use of limited resources and make available funds for the priority sectors, as part of its austerity measures in the face of falling revenues owing to the coronavirus pandemic.
Revenue generation has drastically fallen because of the collapse in economic activities owing to the pandemic, compelling the government to be out to cut avoidable expenses.
Recently, the government decided to put a hold on the implementation of low-priority development projects involving Tk 40,000 crore.
The amount accounts for about 20 per cent of the Tk 205,145 crore annual development programme for the current fiscal year. Fund disbursement for the low-priority projects would be postponed for now.
Last month, the government cancelled the purchasing of new vehicles under all operating and development expenses for the rest of 2020.
Procurement of new or replacement vehicles under all expenditures of government, semi-government, autonomous and other agencies would be on hold until December 31.
As the government allocated additional funds for certain sectors to combat the pestilence, it had suspended financing for all low priority projects in the revised ADP for the immediate past fiscal year. The cost-cutting measures would continue in FY21 as there is no sign of the contagion petering out.
Currently, government officials are not keen to travel abroad because of the global coronavirus pandemic. But the government wants to continue the restriction even after the situation improves as revenue generation would not pick up sharply.
Government officials, however, have made it a habit of taking foreign trips for each and every project, regardless of their scale. It is this culture that Prime Minister Sheikh Hasina reproached at the meeting of the Executive Committee of the National Economic Council in December last year.
"The prime minister expressed discontentment and annoyance over excessive foreign trips," Planning Minister MA Mannan told reporters at the time.
The revenue target for the National Board of Revenue was Tk 300,500 crore in the revised budget of last fiscal year.
The final figure is not available yet but officials hinted that they might be able to earn Tk 220,000 crore to Tk 222,000 crore at the end.
The government is likely to face a severe revenue crunch this fiscal year, as it did last year.
There are several other areas with potential for large savings, according to Hussain.
"These include expenditure on buildings, training, entertainment, subsidies and equity. One way to determine how much can be saved is to limit these expenditures to the level spent in FY19 or in the FY20 revised budget. The latter would yield less saving than the former, but in both cases substantial savings are possible."
Overpricing in public purchasing is another huge source of waste of public money. Anecdotal evidence on massive overpricing is plenty. Laptops costing Tk 51,000 to Tk 87,000 per piece are priced at Tk 1.4 lakh or more, he said.
"We know about the overpriced pillows, curtains, goggles and so on. How such overpriced purchases pass through internal oversight without raising any red flags needs to be identified. This is literally a gold mine for extracting expenditure savings."
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