Ministries told to save money
KATHMANDU, MAY 27 - The National Planning Commission (NPC) has asked the ministries to cut down on their recurrent expenditure under various headings by 15 percent to save money for the post-quake reconstruction.
The earthquakes and their aftershocks are estimated to have caused destruction amounting to Rs500 billion, and massive resources are envisaged to be required for the reconstruction, prompting the government to move to slash administrative costs.
The NPC expects to save around Rs1-1.5 billion by squeezing recurrent expenditure.
NPC member Chandra Mani Adhikari said that the ministries had been told to reduce spending by 15 percent under various recurrent headings that are not directly related to development.
“The recurrent expenditure for the salaries of government employees, pensions, medicine supply and social security won’t be cut,” said Adhikari who has been overseeing the budget affairs at the NPC.
Another NPC member Prem Dangal said the NPC had told the ministries to cut spending on foreign trips, buying vehicles and capacity building, consultancy and contingency costs.
“There is a trend of setting aside 5 percent of the total budget as contingency costs for every construction project,” said Dangal. “We have told them to reduce that.”
According to Dangal, the NPC has also asked them to submit projects that are already under implementation instead of proposing new ones as far as possible.
As the government does not expect to get the desired amount of resources from donors, it is moving towards cost cutting measures besides raising internal loans.
The government had not been planning on raising internal loans until the earthquake struck the country, but it has now announced a scheme to raise domestic debt of Rs52.75 billion. The Finance Ministry said it would raise internal loans on a bigger scale in the next fiscal year as there is fiscal space to do so due to a lower loan ratio against the country’s gross domestic product.
Beside cutting costs and raising internal loans, the government aims to collect as much resources as possible from donors. An international donors’ conference has been planned for June 25 in Kathmandu . The government has said that it would prepare the next fiscal year’s budget based on the resources pledged by the donors at the conference.
The government has announced a reconstruction fund of Rs200 billion for which it has set aside Rs20 billion. It plans to obtain the rest of the money from donors. The budget ceiling set by the NPC for the government for the next fiscal year is Rs735 billion.
However, NPC officials said that the ceiling might have to be raised due to the massive resources needed for reconstruction and possible increased aid pledges from donors. “There is a possibility that the budget will swell to more than Rs800 billion,” said Dangal.
Source: ekantipur
