Govt. to observe fiscal prudence to meet the recurrent expenditure

While the government has sufficient budget for capital expenditure, there is a concern regarding the recurrent expenditure as the government has proposed major changes in the Financial Year (FY) 2020-2021 annual budget since revenue generating sectors are being affected by the pandemic.

During the meet the press session on Friday, finance minister Namgay Tshering said that the theme of FY 2020-2021 annual budget is economic resilience transformation.

Lyonpo said that for the FY 2020-2021, there will be financial expenditure reforms.“If we look into the Gross Domestic Product growth, the main trigger is government’s expenditure.”

Lyonpo said that one of the key reforms in FY 2020-2021 is that the government is going to start doing more work with less expenditure by optimizing the resources. “The annual plan will not be static and it will be highly dynamic,” Lyonpo said, adding that there will be a review every six months based on how COVID-19 behaves.

Lyonpo mentioned that the government is observing fiscal prudence. “Where it is genuinely required, the money will be spend. People should treat government’s budget as own personal money.”

“There is no doubt that we will not meet our recurrent expenditure from the available domestic revenue despite the pandemic,” Lyonpo said.

As per the constitution, the recurrent expenditure should bemet through domestic revenue.

Lyonpo said that the COVID19 situation has brought them the opportunity to reform the system of financial management.

“This time capital budget allocation is higher than recurrent budget allocation which has never happened in the past years.”

Lyonpo said that it is certainly sure that there is decline in domestic revenue mainly because there will no revenue from tourism and other sectors.

He added that with all this in place the government has to rationalize in terms of incurring the recurrent expenditure “where to spend to spend and not spend.”

“We have all the mechanisms in place to match the recurrent expenditure with the available domestic revenue so that we are not breaching the constitution,” Lyonpo said.

The government will also allocate recurrent budget to all budgetary agencies including ministries and dzongkhags as block grants.

Lyonpo said that as a means to observe fiscal prudence and ensure that everyone takes accountability at the end of the day, they have introduced block grant for all the recurrent expenditure at ministry, agencies and thromdes.

Prime Minister Dr Lotay Tshering said that if the government spends as usual following precedent, the domestic revenue will be not enough for FY 2020-2021. “In the 12thplan  the recurrent budget allocation is higher than the capital budget allocation.”

The budget will be presented in the parliament session on Monday.

Dechen Dolkar from Thimphu