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Conflict, Covid-19 hit economy as budget deficit widens: MoF

Conflict, Covid-19 hit economy as budget deficit widens: MoF

author avatar
19 Jul 2021 - 12:25
Conflict, Covid-19 hit economy as budget deficit widens: MoF
author avatar
19 Jul 2021 - 12:25

KABUL (Pajhwok): The Ministry of Finance (MoF) on Sunday linked this fiscal year’s budget deficit to the surge in insecurity, spread of coronavirus and drought, asking government institutions to limit their expenditures.

Over 473 billion afs budget was approved for the ongoing financial year that included 311 billion afs general budget and 161 billion afs development budget.

According to reports, the deficit was 37 billion afs which was said to be compensated by taking loan from the International Monitory Fund (IMF).

A letter from the MoF available with Pajhwok Afghan News reads that this year budget faced deficit which would possibly widen.

The letter signed by Acting Finance Minister Mohammad Khalid Paenda is dispatched to General Treasury Department and all budgetary units of the state machinery to limit their expenditures due to growing deficit in the budget.

Surge in the expenditures of security institutions, health sector and decline in revenue are some of the reasons behind the growing deficit in the budget, the ministry said.

The ministry has called on all budget units to save on regular budgets and optional development budgets in order to timely implement the salaries of civilian and military personnel and other necessary departmental expenditures and prevent further national budget deficits.

In addition, the ministry demanded a halt to the appointment of short-term employees, issuance of part time pay to NTA salary scale employees, super scale employees and similar privileges to other employees.

According to the MoF letter, part time pay for controller employees in the capital and provinces is also cut off.

The ministry also demanded a halt to unnecessary domestic and international trips, payment for commercials — printing press, calendars, magazines, payment to local educational institutions, to cinema, workshops, bonuses, gifts and purchase of furniture and other equipment.

The ministry warned relevant authorities that in case of failing to fulfill the orders, the concerned authority will be held responsible.

Hamid Arghandiwal, MoF media wing in-charge, said that half year budget was discussed in the cabinet and in the context of ongoing situation in the country, set targets of revenue collection could not be achieved.

He added lately the third wave of coronavirus and previous wave of the pandemic were some of the reasons that hampered revenue collections.

He added due to the drop in revenue some uplift projects had been halted and in addition government institutions had been asked to make sure that their expenditures were restricted.

While reviewing the half-year budget, most expenditures of security institutions were provided from optional funds and still the MoF was committed to ensuring the provision of civil service employees’ salaries in time.

But economic affairs experts believe that budget deficit rises at a time when there is war but there is nothing to be worried about.

Economic Affairs Expert QaisMohammadi said when conflict intensifies more money is needed than the amount allocated during budget drafting.

He said besides high war costs, the government also lost its revenue sources, adding that currently some ports of the country were in the hands of Taliban.

He termed foreign loan in the exchange for the country’s natural reservoirs as one of the options to deal with the situation.

He added taking loans from banks and business community was a normal thing and added most of governments took loan from its people and returned it gradually.

According to Mohammadi, another way to deal with the situation was excavation of natural reservoirs and its sale to other countries.

He stressed such deficits were not something to be worried about, adding that it may continue till the end of the year or until the establishment of peace.

President Ghani has discussed budgetary related matters with MoF and has stressed on transparency in utilizing the international community’s $4 billion annual aid.


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