Staff reporter :
The government has introduced measures to reduce operating expenditures in the coming years to address the rising trend driven by both global and domestic challenges. According to an official document from the Ministry of Finance, operating expenditures are projected to account for 58.7per cent of total public expenditure in the 2025-26 fiscal year and 58.4per cent in 2026-27. The current fiscal year’s target is 59per cent.
Operating expenditures cover wages and salaries for government employees, the procurement of goods and services, subsidies, transfer payments, interest on domestic and foreign loans, and food account operations.
Operating expenditures increased from 55.6per cent in FY19 to a peak of 62.6per cent in FY23 due to the twin crises of the COVID-19 pandemic and the Russia-Ukraine conflict, which necessitated significant government spending. Key drivers include interest payments, a steady rise due to increasing debt servicing obligations, and Subsidies and Transfers that Expanded from 2.9per cent of public expenditure in FY19 to an estimated 4per cent in FY24, reflecting increased social welfare and economic stabilisation efforts.
Between FY19 and FY23, operating expenditures averaged 7.6per cent of GDP. The revised budget for FY24 indicates an increase to 8.6per cent, attributed to higher domestic interest rates and global exchange rate volatility. Despite these pressures, the government aims to stabilise operating expenditures at 8.3per cent of GDP in the medium term through strategic adjustments and fiscal discipline.
The share of salaries and allowances as a percentage of GDP decreased from 1.8per cent in FY19 to 1.4per cent in FY23, not due to salary reductions but as a reflection of broader economic growth. This share is projected to rise slightly to 1.5per cent by FY25, still below the FY19 level.
Expenditures on goods and services fell from 7.3per cent of total expenditure in FY19 to 5.9per cent in FY23 due to austerity measures and resource reallocation during the COVID-19 period. Revised estimates for FY24 place this figure at 6.1per cent, with projections of around 6per cent in the medium term.
The government is adopting a strategic approach to rationalise subsidies, focusing on livelihood support for vulnerable populations.
