a year ago

Allowing public some breathing space

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The government in its revised budget for the current fiscal year is going to increase the allocation for operational expenditures which involve costs of running the administration, maintenance work, repairs, etc. Oddly though, this is being done at the expense of the development budget which is being curtailed to make room for the enhanced operational cost of the government. In the process, allocation for the revised operational budget will be Tk10 billion more than what it was at Tk 4.18 trillion in the current national budget.  Though as a percentage of the total allocation for operational cost in the current budget (FY23), the proposed increase is rather small at close to 0.24 per cent, this is still significant seeing that this is happening at a time when the government has adopted a policy of austerity. So, the question is when in the face of the country's growing current account deficit, the government is tightening the belt to keep the economy afloat, why should it be different for the administrative and some other expenditures? In fact, cost-cutting should stress reducing expenditures that are not essential. More importantly, in the present context, the stress is on saving foreign exchange which is being spent mostly in importing fuels, raw materials and capital machinery for the industry, essential foodstuffs and other goods including luxury items.   

So, in the category of non-essential items should first come luxury goods including private cars, avoidable foreign tours, etc. The government has already started to control these types of non-essential expenditures. When it comes to cutting back on development projects, those should be the ones that the country can do without particularly at this crunch time. So, work for some development projects, which are not fully foreign-aided and not yet started, or partially started, can be scrapped, or suspended until things turn for the better. There should be clear guidelines about which development projects should be considered important and be continued and which ones should be postponed. What about operational costs? Do all the operational activities of the government fall under the category of being 'essential' so much so that no part of them can be trimmed?  On the contrary, by reducing administrative expenditures, the government can set an example for others to emulate. For instance, a significant reduction in overhead costs can be an example of moderation or even self-sacrifice. However, necessary maintenance work needs to be continued and the operational budget must make allowance for that. At the same time, there is scope for austerity in the use of expensive cars by government high-ups and the fuels such vehicles consume, reducing the frequency of their tours, meetings and other engagements that could be done, say, by going online.  Also, some of their privileges could be a little pruned at a time when the common people are going through a time of severe economic hardship. But in the present case, in the government's eye, operation seems to have taken precedence over development. That is why, it has slashed expenditures on development work by more than 7.0 per cent from Tk2.596 trillion in the current budget which in absolute terms comes to Tk 0.183 trillion, or Tk183 billion. 

Of course, development activities such as building huge infrastructures like bridges, metro-rails, airports, expressways, flyovers, etc are highly expensive foreign- currency-guzzling projects. The government may well cut expenditures on such projects for the time being. But there should be no compromise on development work in general that are necessary and create employment both in the urban and rural contexts. Unfortunately, as usual the government agencies responsible for running development projects under the Annual Development Programme (ADP) could not perform at the expected level. As a result, in the last six months between July and December of the current financial year more than 75 per cent of the development work remained reportedly incomplete. As expected, the overall expenditure on those projects, both in terms of their operational and developmental costs, remained rather low at 30.70 per cent and 14 per cent respectively. Even so, what is interesting to note here that the amount of money spent for operation of those projects was more than double the amount spent for actual development work! It is indeed an example of how expensive the operators of those projects are in comparison with what they actually execute. Now, will the government officials who failed to deliver in implementing the ADP projects according to schedule be held to account? Are not they a drain on the country's resources like poorly performing projects they are in charge of? So, at this time of falling external income, the government needs to be prudent in its expenditures. To save dollars, foreign-aided programmes should be kept while unnecessary government expenditures curtailed. For any increase in government expenditures in the non-productive sectors will only increase inflationary pressure on the economy. 

Consider the constant rise in the prices of goods and services day in day out, which is causing a gradual loss of the consumers' purchasing power. As the consumers' incomes are not increasing on a par with the commodity prices, the economists are advising the government to contain inflation. Since the prices of goods in the market are rising, an expansionary monetary policy, which the government is said to be pursuing, will only give a further push to the trend. So, in these critical times, the emphasis should be on keeping the inflation under control, so that the common people are allowed some breathing space. 


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