Budget surplus means budget underutilized: Finance Minister

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Budget surplus means budget underutilized; it does not mean that the government is not spending budget but that the government is not able to utilize it for all planned development activities in the country, clarified Finance Minister Namgay Tshering at the National Assembly yesterday.

“There should be nomisconception about the statement that the government is worried about fiscal surplus not fiscal deficit,” he said, in response to Opposition Leader (OL) Dorji Wangdi’s question about the need for agencies to enforce contractual provision of insurance for medium and large-scale works.

The OL mentioned that in order to ensure adequate safeguard and protection of interest of the contractors and the government, the relevant authorities must make it mandatory for contractors to comply with the insurance requirement as per the standard bidding documents.

According to Lyonpo, after launching the electronic Public Expenditure Management System (e-PEMS) and Global Interchange for Financial Transaction (GIFT) payment system, they do not have issues regarding financing contractors and others.

“This is an important milestone towards enhancing the Public Financial Management and to promote cashless and digital payments in the country. The e-PEMS is an online accounting and payment system of the Royal Government of Bhutan implemented from July 2019 (FY 2019-20),” Lyonpo added.

Lyonpo shared that the implementation of e-PEMS and GIFT payment system has eliminated use of manual cheques, simplified bank reconciliation process; improved public service delivery through reduced turnaround time (TAT); minimized risks of fraud, corruption and rent seeking opportunities, improved reporting and consolidation of the government accounts, and supported the initiative of moving towards a cashless economy while reducing administrative burden.

However, Lyonpo said that in the current scenario, there are two initiatives for contractors: such as force majeure and simplified procurement rules and regulations.

Force majeure means unforeseeable circumstances that prevent someone from fulfilling a contract.

“With the ongoing COVID situation, as far as possible, the contractor shall request for time extension to the procuring agency and enclose relevant documents as evidence. The concerned project manager or site supervisor must clearly review and authenticate the grounds for requesting the extension while ensuring to record detailed facts of all associated problems arising from the COVID disruption,” Lyonpo informed the house.

According to Lyonpo Namgay Tshering, under COVID-19 situation, procurement rules and regulations are simplified and the ministry has notified all the procuring agencies to expedite the implementation of activities in the 12th FYP including projects under the economic contingency plan.

“The rules have been formulated with the objective of ensuring time and cost effectiveness, efficiency, fair and equal access for award of contracts,” said Lyonpo.

The committee reiterated the RAA’s recommendations such as the Procurement Rules and Regulations 2019 that mobilization of advances must be done via e-payment.

The mobilization advance of 10% of the contract price and the secured advances against the construction materials brought at the site by the contractor is subject to a ceiling of a maximum of 75% of the cost of materials delivered at the site. The recoveries are to be made from the interim progress payments in the months in which these materials are used in the works.

Meanwhile, the Report of the Public Accounts Committee presented a review and report on annual audit report to parliament on the economy, efficiency, and effectiveness in the use of public resources and the implementation of policy.

The Annual Audit Report (AAR) 2019 has been compiled from 564 audit reports pertaining to 10 ministries, 16 Dzongkhag administrations, 40 Gewog administrations, 14 autonomous agencies, eight corporations, five financial institutions, three Non-Governmental Organizations and two Hydro Power Projects.

According to the Public Accounts Committee, the Annual Audit Report last year reported total unresolved irregularities amounting to Nu 1,415mn as of March 31, 2020. It has increased by 134% compared to the irregularities of Nu 604mn reported in AAR 2018.

Of the total unresolved irregularities of budgetary bodies, ministries accounted for 45.50% (Nu 643 mn). MoWHS has the highest amount of irregularities with Nu 520mn followed by Ministry of Home and Cultural Affairs with Nu 46mn.

Likewise, 16 Dzongkhag administrations accounted for 16.49% (Nu 233mn) of the total unresolved irregularities. The highest amount of irregularities is reported in Samdrup Jongkhar Dzongkhag amounting to Nu 135mn, which among others included fraud and corruption cases of Nu 0.8mn and embezzlement with Nu 7.598mn.

The 40 gewog administrations under 10 Dzongkhags account for only 2.59% (Nu. 34.601mn) of the total irregularities. Drugyelgang Gewog Administration has the issue of embezzlement of Rural Taxes of Nu 0.065mn.

Autonomous agencies accounted for 9.87% (Nu 139mn) of the total irregularities. The highest amount of irregularities is reported under Thimphu Thromde with Nu 35.512mn followed by Gelephu Thromde with Nu 32.558mn and Dratshang Lhentshog with Nu 18.397mn.

Eight Corporations accounted for 2.74% (Nu 38.842mn) of the total irregularities. The Bhutan Postal Corporation Limited has the highest irregularity of Nu 21.112mn followed by Food Corporation of Bhutan Limited with embezzlement amount of Nu 6.504mn.

Five Financial Institutions accounted for 20.81% (Nu 294.488mn) of unresolved irregularities.   The highest amount of irregularity is reported under Bhutan National Bank Limited with Nu 229.901mn followed by National Pension and Provident Fund with Nu 54.427mn

Three NGOs accounted for 2.13% (Nu 30.2mn) of the irregularities. The Construction Association of Bhutan has the highest irregularity with Nu 16.656mn.

Lyonpo said that fraud, corruption cases and embezzlement among others are increasing when there is no internal audit within the ministry, agencies and administration.

“If the committee talks about internal audit, financial and procurement rules and regulations, this could lead to a drop in such cases in the country,” added Lyonpo.

Kinley Yonten from Thimphu

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