The finance ministry will not provide any additional budget aside from the allocated budget for any additional activities, unless activities are critical
The ministry of finance (MoF) will not entertain any additional budget for any additional activities for the financial year 2023-2024 aside from the budget allocated, given the current macro fiscal outlook and the need to ensure that the economy remains on a sustainable path. According to the finance ministry, the budget for the fiscal year (FY) 2023-2024 has been allocated to prioritized activities and programs that are critical, mandatory and spillover in nature.
The finance ministry stated that with the prioritized budget for the FY 2023-2024, there won’t be additional budget for meeting the expenses on transfer benefits of the public servants unless it is a critically required.
Similarly, the annual current grants do not include budget provisions for retirement benefits. Rather the budget requirements for separations or resignations must be submitted with detailed working documents and clearances to the department of planning and performance.
There is absolutely no fiscal space to accommodate and facilitate additional budget for new activities under the royal government financing including the implementation of ad-hoc and unplanned activities during the FY, according to the ministry.
“With the available resources fully allocated, the budgetary heads must exercise due diligence and judgment to respond to emerging priorities through reprioritization exercise within the approved budget and defer the implementation of projects that are less urgent in the short term,” the ministry stated.
For instance, the FY 2023-2024 budget shall refrain from distribution and supply of free handouts such as seeds, seedlings, household items, CGI sheets, amongst others, irrespective of the funding source.
According to the finance ministry the supply of free handouts were made to individuals without analysis of impact, economic returns and sustainability.
In addition, the ministry has not allocated budget to buy pool vehicle for the FY 2023-2024 in view of the existing moratorium on the import of vehicles due to current foreign reserve position and tight fiscal situation.
However, the ministry stated that any matter related to pool vehicle irrespective of type of vehicle including electric vehicle or fossil fuel and acquisition modality that is purchases or received through gift and donation must be in line with chapter VII of the revised property management rule 2022.
Section 7.1.2. of the chapter states that before initiating acquisition of any vehicles (Electric or Fossil Fuel), either through procurement or assistance received IN – KIND (donation/gifts), explicit clearance of the MoF shall be obtained, irrespective of the type of vehicles, source of financing including donations and gifts. This process shall apply even if provisions for such acquisition are included as part of approved projects or MoUs or agency’s annual budget. Section 7.1.3 says that the MoF shall review and assess the existing fleet position and vehicle deployment pattern of the Budgetary Body before issuing clearance and import authorization. Further, section 7.1.4 says that the MoF’S clearance shall include standard models of vehicles suitable for the specific needs/ purpose of the budgetary agencies, while section 7.1.5. says that depending on the modality of acquisition, budget provisioning shall be facilitated through annual budget process/ supplementary incorporation/technical adjustment. Finally, section 7.1.6. says that tt shall be the responsibility of the budgetary body to ensure that the cost of the vehicle shall not exceed the approved budget sanctioned by the MoF.
Meanwhile, any cost overrun due to change in scope of work, deviation from original plan and cost of escalation leading to budget implication must be prioritized and managed within the approved budget of the respective agency.
The ministry stated that the budgetary body must refrain from awarding additional work without a secured budget during the cognizance of resource constraints.
With the prioritization of the FY 2023-2024 budget, the human resource development (HRD) has been provisioned under the Royal Civil Service Commission (RCSC) and HRD related activities shall remain subject to RCSC endorsement.
For instance, a notification from the finance ministry states that the recurrent budget for mandatory and controllable expenses has been allocated within the available internal resources. And that the heads of the budgetary bodies must continue to exercise prudence with strong financial discipline to prevent wasteful expenditure, avoid cost overruns and drive effectiveness in all spending.
Meanwhile, FY 2023-2024 budget appropriation of about Nu 85.52 billion (bn) has been passed towards building stronger institution through strategic reforms while ensuring a sustainable fiscal path and smooth transition.
The total estimated resources for the FY 2023-2024 is about Nu 53.51bn including internal resources of Nu 47.14bn and external grants of about Nu 6.36bn.
According to the finance ministry, considering the total expenditure of about Nu 74.86bn against the estimated resources of Nu 53.51bn, the fiscal deficit is estimated to about Nu 21.34bn corresponding to 9.7% of the gross domestic product (GDP).
Sherab Dorji from Thimphu