Govt aims to save Tk 20,000 crore
After the prime minister's directive, the Finance Division yesterday asked the authorities to cut government spending on land acquisition, building construction, and machinery purchase.
The measures may save up to Tk 20,000 crore from the national budget, said a finance ministry official.
The Finance Division's move came after Prime Minister Sheikh Hasina on November 27 at a meeting with secretaries directed them to take more austerity measures.
The latest directive from the Prime Minister's Office is for all government, semi-government, autonomous and statutory bodies as well as state-owned enterprises and financial institutions.
In the directives, the division asked all to fully suspend spending money on land acquisition from the revenue budget of this fiscal year.
Besides, it asked not to issue any fresh notification of award (NOA) for construction of residential and non-residential establishments.
However, where NOA has already been issued, expenses must be limited to 50 percent of the allocation.
The Finance Division also directed the authorities to fully suspend expenses for purchasing computers and computer accessories, other electronic accessories, electrical equipment and furniture.
According to budget documents, the allocation for this end is about Tk 103,406 crore.
If the latest directives from the Finance Division are implemented properly, it would be possible to cut expenses by up to 20 percent, said a finance ministry official.
On the first working day of this fiscal year, the government rolled out a cocktail of austerity measures for its own administration that can conserve about Tk 60,000 crore.
The instructions, which were made in three separate notices issued by the ministry, came after Hasina on June 29 urged everyone to practice austerity from their own positions.
The request came in the face of strained foreign currency reserves, elevated global and domestic inflation, low fiscal space and continued jitters surrounding the Russia-Ukraine war.
The Finance Division also asked the government, semi-government, autonomous and statutory bodies as well as state-owned enterprises and financial institutions not to purchase vehicles, aircraft, ships, boats or barges under any development and non-development budgets until further notice.
There would be no honorarium for attending meetings of the project implementation committee, project steering committee, departmental project evaluation committee and departmental special project evaluation committee.
The austerity measures have been implemented in the annual development programme too by classifying projects into A, B and C categories.
The A-category projects would continue as usual, while up to 75 percent of the allocation could be spent on the B-category projects. All C-category projects have been put on hold, but ministries and divisions can re-route the funds to the A-category projects being implemented by them.
At a meeting last month, the PM told the secretaries that the ongoing global economic crisis due to the pandemic and the Russia-Ukraine war would not go away very soon, and the next year might be tougher.
In this regard, she directed various measures to tackle the challenges effectively.
Subsidy expenditure is the main pressure point in the current budget and the pressure has increased, said a finance ministry official.
Normally, the government's subsidy expenditure remains below Tk 40,000 crore. But in the last fiscal year, such expenses were about Tk 60,000 crore. This fiscal year, about Tk 82,000 crore has been set aside for subsidies. And ministries and divisions are demanding more subsidies.
According to an estimate by the finance ministry, the subsidy demand would go up to Tk 105,105 crore if the energy price is not adjusted.
Amid the situation, the government is planning to increase electricity and gas prices alongside taking various austerity measures to reduce pressure on the national budget.