Govt in dilemma over continuation of existing austerity measures
Friday, 6 July 2007
FE Report
The caretaker government is in a dilemma over continuation of the existing austerity measures as most of the ministries and divisions are opposing the formula of lessening unnecessary budgetary expenses, official sources said.
It is likely to take a decision on the issue in line with the sentiments of the ministries and divisions although such measures helped the government save about Tk 7.0 billion in the last two fiscals.
The Ministry of Finance (MoF) introduced 16 austerity measures to mainly cut non-development expenditure in fiscal 2005-06 against the backdrop of global economic recession, sources added.
Many countries, especially the least developed ones like Bangladesh, were hit hard by the steep price-hike of petroleum and other products in the international market.
Among the austerity measures, the most significant one was imposition of a ban on procurement of new cars for projects, which was widely appreciated.
According to sources, the MoF has, however, in its latest recommendation said the continuation of the austerity measures has not been felt necessary by most of the ministries and divisions in the context of changed global economic situation.
But a number of MoF officials are still favouring continuation of the measures considering fluctuation of prices of the petroleum products.
Referring to the forecast of an unstable oil market until 2009 by the reputed organisations including Goldman Sachs, a senior finance ministry official said the government should follow the austerity measures.
He, however, pointed out the government would not have needed to continue with such measures had it been able to cut the losses incurred by the state owned enterprises.
The government incurred more than Tk 42.28 billion due to losses by the 16 public sector entities in the just concluded fiscal, which is the highest amount in last one decade.
The Bangladesh Petroleum Corporation alone accounted for a loss of Tk 31.75 billion in fiscal 2006-07.
The existing austerity measures also include a 10 per cent cut in fuel supply to ministries, their divisions, departments and bodies and 10 per cent cut in entertainment and miscellaneous expenditures of both development and non-development budgets.
Under the same directive, the ministries and divisions were also asked to be economical in using telephone, water, electricity and gas to curb the misuse among the ministries, their divisions and departments.
The caretaker government is in a dilemma over continuation of the existing austerity measures as most of the ministries and divisions are opposing the formula of lessening unnecessary budgetary expenses, official sources said.
It is likely to take a decision on the issue in line with the sentiments of the ministries and divisions although such measures helped the government save about Tk 7.0 billion in the last two fiscals.
The Ministry of Finance (MoF) introduced 16 austerity measures to mainly cut non-development expenditure in fiscal 2005-06 against the backdrop of global economic recession, sources added.
Many countries, especially the least developed ones like Bangladesh, were hit hard by the steep price-hike of petroleum and other products in the international market.
Among the austerity measures, the most significant one was imposition of a ban on procurement of new cars for projects, which was widely appreciated.
According to sources, the MoF has, however, in its latest recommendation said the continuation of the austerity measures has not been felt necessary by most of the ministries and divisions in the context of changed global economic situation.
But a number of MoF officials are still favouring continuation of the measures considering fluctuation of prices of the petroleum products.
Referring to the forecast of an unstable oil market until 2009 by the reputed organisations including Goldman Sachs, a senior finance ministry official said the government should follow the austerity measures.
He, however, pointed out the government would not have needed to continue with such measures had it been able to cut the losses incurred by the state owned enterprises.
The government incurred more than Tk 42.28 billion due to losses by the 16 public sector entities in the just concluded fiscal, which is the highest amount in last one decade.
The Bangladesh Petroleum Corporation alone accounted for a loss of Tk 31.75 billion in fiscal 2006-07.
The existing austerity measures also include a 10 per cent cut in fuel supply to ministries, their divisions, departments and bodies and 10 per cent cut in entertainment and miscellaneous expenditures of both development and non-development budgets.
Under the same directive, the ministries and divisions were also asked to be economical in using telephone, water, electricity and gas to curb the misuse among the ministries, their divisions and departments.