Bangladesh

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AUSTERITY MEASURES

Govt vehicles purchase banned for 6 months

Shakhawat Hossain | Published: 00:51, Jul 10,2020

 
 

The government on Thursday banned the procurement of vehicles by ministries and divisions until next December as part of its austerity measures against the backdrop of the COVID-19 fallout.

Economists welcomed the move but asked the government for making the austerity measures more comprehensive by slashing other unnecessary expenditures and suspending the implementation of the mega projects undertaken on political considerations. 

A Finance Division  directive on the day asked all government, semi-government, autonomous and other bodies to suspend buying of vehicles until December 31 with the allocations under both development and operation budgets.

Signed by joint secretary Mahfuzul Alam Khan, the directive said that the replacement of even old cars would also be under the purview of the temporary ban taken as part of ‘the government’s austerity plans to tackle the COVID-19 crisis’.

Policy Research Institute executive director Ahsan H Mansur said that it was a welcome move that had become imperative for the government to cut expenditures against the backdrop of negative growth in the revenue generation in the just-concluded fiscal year.  

Due to the coronavirus-induced disruption in economics activities, the tax collection by the National Board of Revenue recorded a 3.79 per cent negative growth in 2019–20.

The revenue earned in the fiscal year was Tk 2,15,400 crore in place of Tk 2,23,892 crore mobilised in 2018-19.

Ahsan H Mansur said that the government should shed many other unnecessary expenses so that its austerity steps were not criticised as mere eye wash.

According to him, the monthly car maintenance allowances of Tk 50,000 for the officers down to the deputy secretaries plus their entertainment costs and many other perks should also be suspended.

The government’s operational cost rose four and a half fold to Tk 3,48,180  crore in the current fiscal year from Tk 77,243 crore in 2009–10 as the perks and privileges of the government officers and employees were raised on a number of occasions.

The government’s borrowing from the country’s banking system for the first time exceeded Tk 85,000 crore in the just-concluded financial year 2019–20 amid a huge revenue shortfall.

Bangladesh Institute of Development Studies former director general MK Mujeri said that comprehensive austerity steps were much needed since the country’s economy was facing risks of a recession.

Economists are also asking the government to keep suspended the implementation of mega projects, including Rooppur Nuclear Power Plant, amid the economic downturn.

But the government has allocated the highest Tk 15,000 crore for the RNPP project in the current fiscal year to end in June 2021, they regretted. 

The country’s export earnings in 2019–20 dropped to a five-year low of $33.67 billion as the coronavirus pandemic hit the global business hard.

The 2019–20 export earnings declined by 16.93 per cent, or $6.86 billion, from $40.53 billion in 2018–19 as the pandemic disrupted both the supply and demand sides.

According to Finance Division insiders, the government was forced to tighten its belt in 2009–10 amid the global recession.

They said that the austerity measures included reducing expenditures on protocol maintenance, outsourcing third and fourth class employees, and vehicles, cutting fuel consumption, trying economical use of telephone, water, electricity and gas.

They, however, doubted the success of the current directive in checking the government expenditures because they said most ministries and divisions purchased vehicles in the third and fourth quarters of the fiscal year.

The Bangladesh Road Transport Authority registered 16,783 passenger cars in 2019, half of which would be new cars.  

Uttara Motors sales head Golam Mostafa said that the government was still the single biggest buyer of the brand-new cars as it procured 50 per cent of the annual sales.

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