The government may halt the 760,000 kip monthly allowance paid to state employees next fiscal year, which starts on October 1, to ease its financial burden.
A shortfall in revenue has forced the government to cut expenditure to ward off a possible financial crisis, according to a senior official.
However, the government will stand by its commitment to increase officials' monthly salary from 4,800 kip to 6,700 kip per index level next fiscal year, an almost 40 percent increase compared to the current level.
Government spokesperson Ms Bounpheng Mounphosay delivered the message when speaking at a press conference on the sidelines of the open government meeting held in Vientiane last week.
“The government is very concerned about the livelihoods of its employees. This was beh ind last year's decision to raise salaries and provide a monthly allowance,” she said.
“But now we have some financial problems because we could not collect the amount of revenue planned. At the government meeting with provincial governors, we centred our discussions on the measures required to meet revenue collection targets.
We may have to halt the monthly allowance, but it doesn't mean we will stop it completely. I want all officials to understand the financial difficulties the government faces.”
Meanwhile Minister of Finance Phouphet Khamphounvong said “We discussed the allowance at length and we are of the view that we need to suspend it for the time being.”
“The 760,000 kip allowance aims to provide officials with a financial boost and doesn't need to be paid permanently. We will only do it occasionally. Retired officials and officials with disabilities will continue to receive the allowance.”
Last year the government decided to pay officials an allowance of 760,000 kip per person per month to cover the cost of electricity, water and clothing. But this meant a huge increase in expenditure.
By cutting the allowance, the government could save about 1,368 billion kip per annum.
Mr Phouphet said expenditure had increased significantly last year after the government increased officials' salaries and awarded them an allowance. The government is also allocating 17 percent of its total budget to the education sector and 9 percent to the health sector.
“We increased expenditure despite the fact that our mechanisms for collecting revenue have not improved. Over the past year, we have encountered problems with expenditure because revenue collection has been inadequate,” he explained.
The minister admitted that delays in paying officials' salaries were also related to the revenue shortfall. In some provinces, officials have not yet received their salary for July.
“I say this: it doesn't mean the government has failed to collect revenue. I want to tell you revenue collection increased by 20 percent compared to the same period last year, but expenditure rose by 40 percent,” Mr Phouphet said.
He urged all sectors to cooperate with the Finance Ministry to address loopholes in revenue collection. “We must clamp down on expenditure. Our tendency to throw parties and entertain guests should be restrained. We have to think how we can save money by cutting costs.”
He said the government had lost a lot of money in private investment projects because these had gone ahead without a proper bidding process, meaning they cost a lot more than they should have.
By Times Reporters (Latest Update September 24, 2013)
