BUSINESS New normal created by pandemic means governments must learn to spend less


New normal created by pandemic means governments must learn to spend less

China Daily

07:32, June 15, 2020

Chinese 100 yuan banknotes are seen in a counting machine at a bank in Beijing. (Photo: Agencies)

Some central government departments, including the Ministry of Finance, Ministry of Civil Affairs and Ministry of Education, disclosed their 2020 budgets last week. It is noteworthy that their planned expenditure this year on outbound business trips, government-subsidized vehicles and official receptions has dropped by more than 50 percent from the level of last year.

Which is not a surprise. Premier Li Keqiang vowed to reduce the central government's expenditures in these fields by more than 50 percent in the Government Work Report he delivered to the country's top legislature during the latter's annual session in May.

However, whether these departments can fulfill their duties with a dramatically shrinking budget remains to be seen, as their to-do lists of tasks waiting to be-and the cost of doing so will not become shorter, especially in such a trying year as this one.

The economic difficulties caused by the outbreak of the novel coronavirus are challenging. Governments of various levels have to adapt to the new normal by first improving their own work style and efficiency.

Limiting government spending on its own activities means more public money can be spent on the most worthwhile purposes, such as stabilizing the supply of basic public goods and services, and to help the medium and small-sized enterprises to weather the storm, so that more jobs and tax revenues can be created.

More important, the move should prompt the authorities to institutionalize the measures aimed at saving money, so that there is no return to profligacy.

The abrupt reduction in spending also means the watchdog departments of the authorities and the auditors checking the spending of public money will have to strengthen their supervision to ensure governments fulfill the requirements of the changes.

Tightening their belts will be a severe test for government departments. But the more governments reduce their operating expenditure, the more space they will create for tax and fee reductions that can stimulate market vitality. Cutting the expenses of government departments should not be just an emergency measure for this "special year" but standard policy and procedure.

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