Struggling to maintain fiscal balance, Finance Ministry announces austerity measures

The Annapurna Express

The Annapurna Express

Struggling to maintain fiscal balance, Finance Ministry announces austerity measures

Hard hit by slow revenue collection and rising expenditure, the government has resorted to cost-cutting measures to maintain fiscal prudence.

On Tuesday, the Ministry of Finance (MoF) decided to cut and freeze the funds allocated under various headings under the recurrent expenditure. As per Tuesday’s decision, the MoF has frozen the remaining funds for the current fiscal year under 14 budgetary headings.

The revenue administration has been struggling to meet the revenue target from the first months of the current fiscal year. The government failed to meet the revenue target in the first half of FY 2022/23. The overall revenue collection has decreased significantly in this fiscal compared to the last fiscal year which the government has seen as a wake-up call to initiate austerity measures.

According to the Financial Comptroller General Office (FCGO), the government’s overall revenue collection (tax and non-tax) stood at Rs 475.609 billion in the first six and half months of FY 2022/23 compared to Rs 568.319 billion in the corresponding period of FY 2021/22. In the review period, the tax revenue collection totaled Rs 427.084 billion, a sharp drop from Rs 518.883 billion during the same period of the last fiscal year.

Given the mismatch between revenue collection and expenditure, the Finance Ministry says it has become necessary to re-prioritize spending and manage resources for national pride and transformative projects and projects and programs that contribute significantly to job creation and economic growth.

The ministry has decided to slash 20 percent of budget spending incurred in various headings of the approved budget of all ministries/agencies of the federal government, including fuel, maintenance, stationery and office assistance, newspapers, printing and publication of information, service, and consultancy.

Likewise, the budget approved for information system and software operation, travel and other allowances, program cost, monitoring and evaluation cost, staff training, workshop and seminar, sundry expenses, machinery and equipment, furniture and fixtures and structural improvement of the buildings would also be reduced by 20 percent.

In the case of projects and programs that are included in the approved budget and programs for the current financial year, but the procurement process has not yet started (except for those projects and programs that have been given prior approval), the procurement process will be allowed only after obtaining approval/consent of the finance ministry.

The ministry has also decided not to undertake any organization and management survey to create additional vacancies. All kinds of conferences, seminars, and workshops to be carried out from the government expenses have been postponed. It has also been decided that new furniture and vehicles will not be procured for the time being. 

In the case of foreign trips at programs requiring compulsory participation of government representatives on public money, the ministries concerned should take approval from the finance ministry. Meanwhile, the ministry has decided to stop the execution of budgetary projects and programs which are yet to be started. With the implementation of these cost-cutting measures, the ministry expects a total of Rs 25 billion would be saved.

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