Govt cuts back on travel expenses to release funds for priority sectors
The government has truly gone one step further to tighten its belt amid drying up of revenues since 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 will be applicable for all travel expenses under operating and development budget of the federal 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 today's fiscal year will 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 because of its officials in FY21, up from Tk 2,130 crore a year ago, said the official of the finance ministry.
"It really is encouraging to start to see the finance division's proactivity in identifying resources of expenditure savings that won't hurt service delivery and implementation of high priority development projects. Travel is one particular source," said Zahid Hussain, a former lead economist of the World Bank office in Dhaka.
"It will help give more clarity to what will be looked at essential and urgent travel if not most travel could be claimed as essential and urgent by those that want to travel," he said, adding that the suspension should continue over summer and winter.
The move came as the government looks to guarantee the best usage of limited resources and provide funds for the priority sectors, as part of its austerity measures when confronted with falling revenues due to the coronavirus pandemic.
Revenue generation has drastically fallen as a result of the collapse in monetary activities due to the pandemic, compelling the government to be out to cut avoidable expenses.
Recently, the government decided to put a hang on the implementation of low-priority development projects involving Tk 40,000 crore.
The amount makes up about about 20 per cent of the Tk 205,145 crore twelve-monthly development programme for the existing fiscal year. Fund disbursement for the low-priority projects will 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 will be on hold until December 31.
As the government allocated additional funds for several 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 aren't keen to visit abroad as a result of the global coronavirus pandemic. But the government really wants to continue the restriction even following the situation improves as earnings generation would not grab sharply.
Government officials, however, have managed to get a habit of taking foreign trips for every single and every project, regardless of their scale. It really is this culture that Prime Minister Sheikh Hasina reproached at the meeting of the Executive Committee of the National Economic Council in December this past year.
"The prime minister expressed discontentment and annoyance over excessive foreign trips," Planning Minister MA Mannan told reporters at that time.
The earnings target for the National Board of Revenue was Tk 300,500 crore in the revised budget of last fiscal year.
The final figure isn't available yet but officials hinted that they could be in a position to earn Tk 220,000 crore to Tk 222,000 crore towards the end.
The government will probably face a severe income crunch this fiscal year, since it did last year.
There are several the areas with prospect of large savings, according to Hussain.
"These include expenditure on buildings, training, entertainment, subsidies and equity. One method to determine how much could 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 compared to the former, however in both cases substantial savings are possible."
Overpricing in public areas purchasing is another huge way to obtain waste of public money. Anecdotal evidence on massive overpricing is plenty. Laptops costing Tk 51,000 to Tk 87,000 per piece will set you back Tk 1.4 lakh or even more, he said.
"We realize about the overpriced pillows, curtains, goggles etc. How such overpriced purchases pass through internal oversight without raising any red flags has to be identified. That is literally a gold mine for extracting expenditure savings."
