Revenue shortfall causes salary payment delay

Revenue shortfall causes salary payment delay

Government revenue collection has fallen short of the target and left state employees frantically checking their bank balances this month after salary payments were delayed by weeks.

Director General of the Ministry of Finance's Budget Department, Mr Saisamone Xaysoulien, told Vientiane Times the late payment was related to a shortfall in revenue collection.

He admitted it was difficult to pay employees and deal with other aspects of government expenditure when revenue targets were not met.

The situation is likely to become even more difficult next month because the new fiscal year brings in an almost 40 percent increase in state employee salaries.

Mr Saisamone said cabinet members, provincial governors and the Vientiane Mayor will meet in the capital on Monday, when ensuring revenue targets can be met will be a priority topic of discussion.

Government officials say it is necessary to tighten fiscal policies and steps must be taken to penalise those who violate laws and avoid paying their dues.

According to a report from the Ministry of Finance, just 78.38 percent of the target figure of 19,500 billion kip was collected in the first 11 months of this fiscal year.

Global economic uncertainty leading to a decline in mining product revenue affected the country's total collection as its income is heavily reliant on the export of natural resources.

The government's revenue colle ction target this fiscal year was 25.17 percent higher than last year's and the budget was aiming for a deficit of about 5 percent of gross domestic product (GDP).

Currently the budget deficit is sitting higher than 5 percent and economists are warning expenditure must be used wisely to avoid a financial crisis.

Over the past 11 months, the government has used overseas loans and issued short-term bonds to mobilise 3,694 billion kip in an effort to balance the budget deficit.

According to the Ministry of Finance, almost 700 billion kip is spent each month on salaries and supporting allowances for state employees.

Once salaries are raised next month the government will have to find an additional 2,000 billion kip in the 2013-14 fiscal year to pay its employees.

Currently salaries stand at 4,800 kip per index level, based on qualifications, experience and position.

The government will raise officials' salary to 6,700 kip per index level next fiscal year and to 9,300 kip the year after.

Last year the government also granted an allowance of 760,000 kip per person per month to employees to cover the costs of electricity, water, and clothing, sharply increasing budget expenditure.

The government has set revenue targets of at least 25,047 billion kip next fiscal year, representing 27.63 percent of GDP.

Budget expenditure has been limited to 29,580 bi llion kip or 32.63 percent of GDP.

vientiane times