Minister of Finance Abdullah Jihad has sent a circular today, informing all government institutions that their budgets have been reduced by 15 percent as per the circular sent on 3 June 2012.
The circular sent on 3 June requested all government offices and councils to present their reduced budgets to Ministry of Finance by 15 June, and all independent institutions to do the same by 20 June.
Out of the 35 government offices which were notified, only 14 were able to meet this deadline.
Finance Minister Abdullah Jihad said today that the budgets have been reduced because income is lower than expected, and because it would not be possible to manage the budget unless it is reduced.
“We wanted the offices to reduce the budgets themselves. But since some of them were not able to do that, we have now reduced it for all offices,” he said.
He noted that some offices face difficulties due to the reduction in budgets.
“Even though we have not received any complaints so far, they did express concern over reducing the budgets. Some offices will face difficulties. But we don’t have a choice,” he said.
Ministry of Finance earlier estimated that MVR2 billion can be saved by reducing the budgets of government offices by 15 percent. Jihad however pointed out that it is unlikely that this amount can be saved.
The cabinet made the decision to reduce the budgets of every government institution by 15 percent, subsequent to estimations that the budget of MVR14 billion proposed for this year will end up at MVR18 billion, which would result in a deficit of about MVR3.4 billion. Government expenditure at the end of the first six months of 2012 stood at MVR7.1 billion.