MoF Decides to Slash Recurrent Expenses; Around 25 Billion Rupees to Be Saved

The Ministry of Finance (MoF) has decided to cut off recurrent expenses as part of its austerity measure.

The country's economic activity has decreased in line with the revenue target for the current fiscal year as a result of the negative effects of COVID-19, the Ukraine-Russia war, and various other factors as well as the decision to completely ban the import of some goods to manage the pressure on the external sector. The burden of current expenses has increased, as have the interest rates on domestic loans and the principal and interest on foreign loans as a result of non-recovery, delayed receipt of budgetary assistance, increased costs for national servants' salaries, pensions, and social security, chemical fertilizer supply, and disaster management. This is also because the Nepalese currency has weakened against the US dollar, which has led to increased expenditure.

The resources of the Nepalese government are under stress as a result of the decreasing payment amount. Currently, there is a negative balance of around Rs. 90 Arba in the government reserve fund for the current fiscal year.

In the current situation, it is vital to reassess spending and manage resources in order to fund national pride initiatives, transformative projects, and initiatives and programs that have a substantial positive impact on employment creation. It is clear that additional resources must be handled in order to manage the obligatory responsibilities of the state and municipal levels as a result of the poor revenue collection in the current fiscal year.

Hence, Ministry of Finance (MoF) has decided to cut off recurrent expenses as part of its austerity measure. The MOF has made the following decisions in order to preserve the budgetary balance.

• In a bid to keep public finance in balance, the government came up with a decision to cut off regular spending. The ministry has decided to increase spending on national pride and game-changer projects, and those substantially contribute to the creation of jobs by re-prioritizing budget expenditure systems.

• As informed, the ministry has decided to slash 20 per cent of budget spending incurred in different 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, programme 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 per cent.

• The ministry has also decided to proceed with the procurement process of the projects having approved the budget and programme of the current fiscal year, which procurement has not yet started, on the approval and consent of the MoF.

• The ministry has also decided not to undertake any organization and management survey in a way that new vacancies are created, not to add new vacancies and not to depute employees exceeding the vacancy quota without prior approval of the MoF.

• In the case of foreign trips at programmes requiring compulsory participation of government representatives on public money, the ministries concerned should take approval from the MoF. No agency and level would take the decision to create additional burden without approval from the MoF, the decision noted.

• The ministry has decided to stop the execution of budgetary projects and programmes which are yet to start and not to create an extra burden of payment in the current fiscal year. The decision is applicable to all universities, foundations/academies, regulatory bodies, boards and all constitutional bodies.

• The ministry took the decision to ask the province and local governments to reduce expenditure, excluding mandatory obligations under the recurrent heading by 20 per cent.

With the implementation of the decision, a total of Rs 10.5 billion would be saved and the projects with an approved budget amounting to Rs 14 billion would be held, states a press release issued by the MoF on Tuesday.