For the sixth consecutive year, the finance division has imposed several restrictions on allocated budget expenditures, including foreign tours and block allocation, as a part of austerity measures amidst the ongoing economic crisis.

The finance division yesterday issued a circular to rein in the expenses of ministries, state agencies, and public corporations and ensure austerity in fiscal year 2024-25.

The finance division came up with the austerity measures within four days of the new fiscal year, which started on July 1.

According to the circular, block allocations for operating budget will be halted from now on.

Similarly, under both operating and development budgets, foreign tours and participation in seminars and workshops abroad will be halted.

However, if it is deemed essential, foreign travel is permitted, subject to approval by the appropriate authorities, according to the circular.

To address economic challenges stemming from the onset of the Covid-19 pandemic in March 2020, the government adopted various austerity measures.

However, although the country gradually recovered from the pandemic-induced economic shocks, the country faced new challenges due to the outbreak of the Russia-Ukraine war, which raised commodity prices globally.

As a result, Bangladesh's macroeconomic stability has suffered, with the main challenges being persistently high inflation and a failure to maintain adequate foreign currency reserves over the past two years.

Against that backdrop, Bangladesh entered a $4.7 billion loan programme with the International Monetary Fund in January last year.

Bangladesh Bank has also been implementing a contractionary monetary policy since fiscal year 2023-24 to tackle high inflation and the forex crunch.

Meanwhile, the IMF and local economists suggested that the government reduce its expenditure further.

The latest budget for FY25 saw only a 4.6 percent increase from the previous year's original budget while the development expenditure increased by only 0.6 percent.

The finance division circular says ministries, divisions, and other public agencies will be allowed to spend a maximum of 80 percent of total allocations for electricity, petroleum, and gas from the operating budget during FY25.

Except for those of the education, health, and agriculture, no ministry will be allowed to construct residential, non-residential, or other buildings.

However, if 70 percent of the construction work on any building has been completed, the agencies may continue construction after approval from the finance division.

"The purchases of all types of vehicles, water vessels, and aircraft from the allocated fund will be halted," the circular stated.

However, ministries can replace vehicles older than 10 years subject to approval from the finance division.

Land acquisition from the operating budget allocation has also been halted.

For land acquisition, ministries and state agencies can acquire land based on clearance from the finance division, provided they complete all procedures.

A finance ministry official said because of last year's austerity measures, the government saved about Tk 2,500 crore.

Economists also said the finance minister should disclose the amount saved from austerity measures during the annual budget speech.

So far, none of the finance ministers have made such disclosures.