Finance Minister says the austerity measures are temporary and if the domestic revenue situation improves, the short-term fiscal measures will be lifted
The government’s austerity measures for the fiscal year 2021-2022 is to bring down the burden on recurrent expenditure, according to Finance Minister Namgay Tshering during the press-meet yesterday.
The Ministry of Finance on July 6 notified that the government would continue to implement the budget policies to rationalize travel (ex-country and in country) within the allocated budget and no hiring of private buildings for office space and new establishments.
It also notified the government to postpone the activation of salary indexation, transfer of civil servants without transfer benefits, and defer monetization of vehicle quota during the fiscal year.
Lyonpo Namgay Tshering said the constitution requires meeting the recurrent expenditure from the internal resources and the recurrent budget has been adjusted within the estimated domestic revenue.
“There was almost 15% of the shortfall in the domestic revenue in the fiscal year 2020-2021, while it has been down by 22% this year,” said Lyonpo.
The austerity measures are temporary and if the domestic revenue situation improves, the short-term fiscal measures will be lifted, he added.
However, further rationalization of the recurrent expenditure shall be carried out if the revenue performance falls below the estimates, the Finance Ministry notified.
“Mandatory expenses available for domestic revenue to match, we do not have a surplus budget,” said Lyonpo.
The notification also states that while the current budget for the fiscal year 2021-2022 has increased by about 8% from the previous fiscal year due to inflation and other emerging priorities, the government has adjusted the current budget within the estimated domestic revenue.
The measures to ensure optimal utilization of the estimated domestic revenue, the recurrent budget has been allocated as Annual Grants to the Local Governments and Block Grants to all other Budgetary Bodies.
“In order, the government capital budget is provided only for critical and COVID-19 related activities, the government has deferred all new construction, procurement of vehicles and rationalized activities related to training and others such as workshops, seminars, orientations, annual conferences, observations of international days, awareness programs and professional services for hiring of consultancies, research, and survey,” the Finance Ministry notified.
For the fiscal year 2021-2022, with the domestic revenue just enough to cover the recurrent expenditure, the capital budget will be financed through external grants, concessional external and domestic borrowings.
In the recent parliament session, the parliament passed a total budget appropriation not exceeding Nu 80,483mn.
The total resources for the fiscal year 2021-2022 is estimated at Nu 56,756.582mn, of which internal resources is Nu 36, 240.271mn and external grants of Nu 20, 525.311mn.
The fiscal deficit for the fiscal year is estimated at Nu 17,153.753mn corresponding to 8.59% of the Gross Domestic Product.
Thukten Zangpo from Thimphu