What the Govt has done to cut spending!
The cost of construction of airports in such close proximity has been reduced from MVR 816.9 million to MVR 39.7 million.
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By
Ahmed Naif
One interesting feature of the government's expenditure and revenue figures released by the Finance Ministry is that the government's expenditure has been reduced this year as compared to last year. With the country facing financial challenges due to high debt, it is incumbent on the state to cut costs as much as possible, as soon as possible. However, this is no easy task.
The latest expenditure and revenue figures released by the Finance Ministry on Thursday showed that the government spent MVR 18.9 billion as of the 6th of this month. Thus:
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That’s 2.4 billion less than last year; 21.2 billion was spent during the same period last year
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38% of this year's total budget of MVR 50 billion has already been spent
How is this government implementing the cost-cutting policy that previous governments could not achieve?
MVR 2 billion saved by reducing project costs
The government has spent MVR 18.9 billion out of the MVR 50 billion budget approved for this year as of the 6th of this month, according to the latest expenditure and revenue figures released by the Finance Ministry on Thursday. Thus:
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It is MVR 2.4 billion less than the same period last year
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Therefore, 38% of the approved budget has been spent in the first five months of this year
Compared to last year, the government saved MVR 2 billion by reducing spending on infrastructure development projects or PSIP. Thus:
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During the same period last year, MVR 5.4 billion was spent on projects by the previous government
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This year, MVR 2.1 billion was spent on projects; MVR 8.9 billion was budgeted
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As a result, capital expenditures have been reduced by half; expenditure has declined from MVR 6.6 billion to MVR 3.6 billion
The largest reduction in project costs was in the construction of airports, bridges and ports. The sector has seen a decline of MVR 1.5 billion so far this year compared to last year. Thus:
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MVR 325.8 million spent this year
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The sector spent MVR 1.9 billion during the same period last year
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The largest part of that has been reduced in the cost of building airports
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The cost of construction of airports has been reduced from MVR 816.9 million to MVR 39.7 million
The details of how the government reduced the cost of projects in the following areas are:
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1-
National Security: Spent MVR 26.9 million, a decrease of MVR 73.3 million
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2-
Health Sector: MVR 39.9 million spent; MVR 59.5 million decrease
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3-
Education: MVR 126.1 million spent; MVR 94.6 million decrease
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4-
Environmental protection: Spent 222.6 million; MVR 15.8 million decrease
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Water and sewerage: Spent 795.8 million; MVR 565 million decrease
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6-
Housing: Spent 323.3 million; a decrease of MVR 109.6 million
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Social development and religious affairs: MVR 99.8 million spent; a decrease of MVR 87.4 million
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8-
Road construction and excavation: Spent MVR 716.5 million; a decrease of MVR 526.9 million
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9-
Fisheries and Agriculture: Spent MVR 10.9 million; a decrease of MVR 75.3 million
Expenditure on salaries rise
According to the Finance Ministry, the government's expenditure on salaries increased by MVR 533 million as of the 6th of this month compared to the same period last year. Thus:
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MVR 4.7 billion was spent on salaries and allowances
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This is MVR 533 million more, an increase of 13% compared to last year
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MVR 4.2 billion was spent during the same period last year
The increase in salary expenditure has led to an increase in government recurrent expenditure or day-to-day expenditure. Recurrent expenditure increased from MVR 13.6 billion to MVR 14.2 billion compared to the previous year. This is an increase of MVR 600 million.
Income offsets recurrent expenses
One of the biggest financial objectives of this government is to cover recurrent expenditure with revenue. According to figures, the government has spent MVR 14.2 billion on recurrent expenditure so far. Revenue stood at MVR 15.4 billion during the period. So:
Revenue covers for MVR 1.2 billion of recurrent expenditures.
However, the government's revenue does not cover expenses coupled with capital expenditures. Therefore, the government's budget deficit, or budget debt, is now at MVR 2.4 billion. At the end of the year, the budget deficit is estimated at MVR 14.1 billion.
