KUALA LUMPUR (July 15): The government has called for the implementation of cost-saving measures among government-related entities to help fund some of the additional expenses related to subsidies for the welfare of the people, according to a circular by the Treasury.

The July 14 circular, entitled "Guidelines on Public Expenditure Savings", was issued by Treasury secretary-general Datuk Seri Asri Hamidon.

“Ministries/departments/agencies/federal statutory bodies/companies limited by guarantee (CLBG) shall restructure their programmes/activities and manage their cash flow by order of priority, and make sure there are no trade-offs on programmes and activities focused on the well-being of the rakyat,” he said.

In the nine-page document, the MoF said savings will be made on operating allocations — excluding OA10000 (emoluments) — to partly cover the increase in subsidies, in line with the government's decision to increase aid and subsidy expenditure for the welfare of the people.

“Therefore, Ministries/departments/agencies need to restructure their allocations and propose management allocation savings for the MoF to achieve a target of at least 5% savings from the remaining operating allocation for the year 2022.

“The MoF will finalise and issue a restraining warrant to inform the amount of the reduced allocation,” said Asri.

The directive by the government comes as the expenditure for assistance and subsidies are projected to reach RM77.7 billion in 2022, exceeding the RM31 billion allocation approved in the 2022 Budget, according to Asri.

The higher expenditure is amid the implementation of subsidies for essential goods and price controls aimed at reducing the impact of global inflation on the country and the people.

Existing subsidies, such as for petroleum products and cooking oil, as well as the electricity and chicken subsidies also contributed to the increase in government spending.

The circular outlined several areas where savings can be made, including in operating expenses, appointments, rearrangement of organisation/establishment of statutory bodies/CLBG, overtime allowance, outstation exchange, domestic and overseas accommodation, acquisition of new assets, event organisation, advertising, outsourcing and development expenditures

Asri noted that the implementation of new programmes or activities by Ministries, departments, or approved agencies shall be covered with existing allocations, except for certain cases involving substantial cost implications and critical implementations.

He said additional allocations for these critical or urgent programmes will be supported by savings on existing allocations, by either making trade-offs or by abolishing programmes that are deemed as not impactful.

“Applications for additional allocation to cover any non-critical requirements will not be considered,” he said.

In this regard, Asri said controlling officers must review existing programmes or activities to identify possible savings, which can be used to accommodate new programmes or activities, trading them off against those that are no longer relevant or are deemed ineffective.

He emphasised that existing programmes or activities must be reviewed before new ones are submitted to the Cabinet or MOF for consideration.