Ban on foreign travel, new car purchases to extend for govt employees in FY25

In a move to continue managing the nation's finances, the Ministry of Finance will extend the ban on foreign travel and new car purchases for government employees for the upcoming fiscal year 2024-25. This applies to both development and operating budgets.

The ministry's Finance Division will issue a formal notification in early July, outlining the specific restrictions. These may include limitations on honoraria for construction work, land acquisition, training, and meetings in both development and operational sectors. 

However, expenditures on petrol, oil, lubricants, and electricity will not be restricted.

The ban on government-funded foreign travel strictly applies to trips financed by government resources. All foreign travel, workshops, and seminars funded under the operating and development budgets will be halted. Essential foreign travel may still be approved on a limited basis by appropriate authorities.

However, government employees will still be permitted to take part in foreign training sponsored by foreign governments, institutions, and development partners. 

They can also enroll in government-funded or development partner-funded foreign study programmes, including Masters and PhD courses under scholarships and fellowships offered by universities worldwide.

Skilled officials, including those directly involved, can travel overseas to inspect and monitor the quality of goods and services financed by suppliers, contractors, and consulting firms.

Despite the ban on car purchases for government employees this fiscal year, the government's purchase committee has approved the acquisition of 261 cars for district and upazila executive officers.

The finance minister announced in the upcoming fiscal year 2024-25 budget speech that austerity measures will continue on a limited scale, with plans for a gradual easing. 

Regarding sectors affected by austerity, a finance division official told The Business Standard that the ban on purchasing new cars, watercraft, and aircraft for government use will persist. Additionally, the prohibition on government-funded foreign travel remains in place.

"There may be some relaxation in the current ban on construction and land acquisition expenditures. Although savings from government officials' honorariums for training and meetings are minimal, restrictions may still be imposed to reinforce the concept of austerity," the official explained, noting that decisions will be finalised by 30 June.

Due to a relatively constrained budget this year, there will be fewer opportunities for austerity measures. 

In the current fiscal year, the finance ministry mandated using a maximum of 80% of the allocation for petrol, oil, and lubricants, and 75% for electricity bills. However, there will be no such restrictions on these allocations in the upcoming fiscal year.

The finance division official explained that despite directives to limit fuel and electricity spending to 80% of the allocated budget, this has not been feasible due to rising fuel and electricity prices. Although electricity consumption has decreased by 20% from last year, higher prices have led to increased bills. 

Moreover, frequent power outages necessitate the use of generators in government offices, further driving up costs. As a result, the entire allocation for petrol, oil, lubricant, and electricity bills can be utilised in the new fiscal year.

Since the Covid-19 pandemic, the government has maintained an austerity policy. The finance ministry has tightened these measures due to a dollar crisis following the Ukraine-Russia war, alongside a shortfall in revenue collection compared to targets. 

However, before the last national election, the government eased austerity measures for the Annual Development Programme.

Officials from the finance ministry reported savings of about Tk15,000 crore in fiscal year 2022-23 due to these austerity measures. Specific savings for the current fiscal year are yet to be determined. 

The budget summary for fiscal year 2024-25 indicates that, in line with the government's austerity policy and to prioritise sectoral funding, investment in shares and equity has been reduced by Tk13,715 crore in the revised budget for fiscal year 2023-24 compared to the original allocation.