Covid-19: Embargo on govt car purchase extended until June 30 next year

Dhaka (Dec 7, 2020): The government has extended the restriction on buying cars for government, non-government and autonomous bodies, till June 30 next year, in a move to tighten public expenditure amid Covid-19 pandemic.

Earlier, on July 8, the government imposed a ban on purchase of vehicles for public officials until December 31. In a new announcement, the restriction has been extended till June 30 next year, according to a circular of the Finance Division of the finance ministry issued on December 3.

Trade and commerce has suffered a blow due to Covid-19 pandemic, said a high official of the division.

In addition, government’s revenue earnings have dropped significantly, while its expenditure has increased, the official mentioned.

Against this backdrop, the government in the new circular has extended the previously imposed ban on car purchase, in the light of the government's austerity policy in the second wave of coronavirus, the high government official added.

Former International Monetary Fund adviser Dr Reza Kibra has said the government should increase spending to tackle the Covid-19 situation without thinking too much about the growing debts.

At the same time, it has to cut the unnecessary public expenditure, he added.

A senior finance ministry official, who did not want to be named, told Business Insider that the government’s revenue collection has not met the target set by the National Board of Revenue (NBR).

On the other hand, government spending on healthcare, including the purchase of vaccines from aboard, is on the rise, forcing it to halt unnecessary expenditure, the official added.

In the first four months (July-October) of the current fiscal year, the National Board of Revenue (NBR) collected only Tk66,555 crore in revenues, up by Tk748 crore over the same period last year.

However, the revenue collection target for the first four months this fiscal was set at Tk87,002 crore, resulting in a deficit of Tk20,447 crore.

Earlier, on July 7, the finance ministry in a circular instructed the government bodies concerned to suspend spending on low priority or less important and medium priority development projects under the Annual Development Program (ADP) to be implemented in the current (2020-21) fiscal year.

However, the government later backtracked on the decision.