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Financial Strategy to 2030: effectively managing revenue and expenditure, reducing public debts

20:28 | 28/03/2022

VCN –Deputy Prime Minister Le Minh Khai signed Decision 368 on March 21, 2022 to approve the Financial Strategy to 2030.

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Advising on the issuance of Government bonds and mobilizing capital for the economic recovery program Advising on the issuance of Government bonds and mobilizing capital for the economic recovery program
Financial Strategy: Ensuring macroeconomic stability and national financial security Financial Strategy: Ensuring macroeconomic stability and national financial security
Illustrative Photo: Internet
Illustrative Photo: Internet

The strategy aims to ensure funds for social-economic development, national security and defense.

Especially, the revenue to the State budget in the 2021-2025 period is not less than 16% of GDP and in the 2026-2030 period is about 16-17% of GDP. Of which, the revenue from taxes and fees from 2021 to 2025 and from 2026 to 2030 is around 13-14% of GDP and 14-15% of GDP, respectively.

The domestic revenue to 2025 accounts for 85-86% and to 2030 accounts for 86-87% of the total State budget revenue.

State budget spending will be effectively controlled and restructured towards sustainability and prioritized for investment and development, ensure debt repayment, increase State reserves, and expand human development and social welfare.

Accordingly, the recurrent expenditure from 2021 to 2025 accounts for 62-63% of total State expenditure and the expenditure for investment and development averages 28% of the total State expenditure.

During implementation, the Government will strive to increase the expenditure for investment and development to 29% and reduce the recurrent expenditure to 60%. From 2026 to 2030, the State will continue to save recurrent expenditure to expand investment and development.

In the 2021 - 2030 period, the State spending will be prioritized for State reserves to quickly and effectively respond to unexpected and urgent events and tasks assigned by the Prime Minister and Deputy Prime Minister.

Strictly managing public debts and ensuring public debt safety

Gradually reducing the state budget deficit; strictly managing public debts, ensuring public debt safety and national financial security.

Specifically, the Government will strive to increase revenue, save expenditure, reduce the state budget deficit to achieve the target in the National Financial Plan, and public debt repayment in the five years from 2021 to 2025 on average of about 3.7% GDP; by 2030 to about 3% of GDP. In case of major fluctuations or risks, the Ministry of Finance shall promptly report to the Government for submission to the National Assembly for consideration and decision.

The annual public debt ceiling in the 2021-2025 period does not exceed 60% of GDP, the government debt does not exceed 50% of GDP, and the country's external debt does not exceed 50% of GDP.

By 2030, public debt will not exceed 60% of GDP, government debt will not exceed 50% of GDP, and the country's external debt will not exceed 45% of GDP.

Building transparent and sustainable financial market and financial services

Developing a stable securities market that operates safely and efficiently, with a reasonable structure, and balancing the monetary market with the capital market, the stock market with the bond market and the derivatives market,

By 2025, the stock market capitalization will reach 100% of GDP; outstanding debt in the bond market will reach at least 47% of GDP, of which outstanding debt in the corporate bond market will be at least 20% of GDP. By 2030, the stock market capitalization will reach 120% of GDP, the bond market's outstanding debt will reach at least 58% of GDP, of which the corporate bond market's outstanding debt will reach at least 25% of GDP.

Building a comprehensive insurance market to meet the diverse insurance needs of organizations and individuals in the economy, the revenue growth of the insurance industry in the 2021-2025 period averages 15%/year by 2025, with a scale of about 3-3.3% of GDP; in the 2026-2030 period is 10%/year by 2030 with a scale of about 3.3-3.5% of GDP.

Developing a stable accounting and auditing service market; improving the quality of these services. By 2025, ensuring 100% of enterprises and large-scale units that are allowed to have their financial statements audited, regardless of the type of operation and form of ownership; strengthening transparency in the field of price appraisal and improving the capacity and quality of price appraisal.

Accelerating the reform of the financial mechanism for the public service delivery sector; restructuring and improving the operational efficiency of state-owned enterprises.

Specifically, perfecting the institution on reforming the management mechanism, the financial mechanism and reorganizing the public service delivery system; completing the roadmap for calculating public services prices for key fields. Reducing 10% of direct expenditure from the state budget for public service delivery units in the 2021-2025 period, compared to the 2016-2020 period and reducing 15% of direct expenditure from the state budget for public units in the 2026-2030 period compared to the 2021-2025 period.

By 2025, completing the task of restructuring state-owned enterprises; by 2030, consolidating and developing a number of large-scale state-owned economic groups which operate effectively and are capable of competing in regional and international markets.

Speeding up price calculation for some public goods and services

Further reforming the method of price management according to the market mechanism regulated by the State; accelerating price calculation for some public goods and services. By 2025, building a national database on prices, which will connect to ministries, governmental and local agencies.

Strengthening the application of information technology and digital financial platform, and modernizing the national financial system.

Building a public, transparent and effective integrated tax management information system; to build a modern and professional Vietnam Customs on par with that of developed countries in the world; leading in implementing Digital Government with Digital Customs and Smart Customs model.

Developing a digital state accounting and budget management information system, contributing to building a digital treasury by 2030; modernizing information technology application in the management of national reserves and management of the stock market towards modernity and efficiency.

Three breakthroughs in financial strategy

The decision specifies three financial strategic breakthroughs, including:

1- To step up perfecting and improving the quality of financial institutions to ensure completeness, consistency and integration; reform the mechanism of management decentralization and state budget allocation to ensure the leading role of the central budget and the initiative of the local budget; restructure the state budget, develop a modern, transparent and sustainable financial market.

2- To reform financial mechanisms and policies for human resource development, science and technology and innovation. To promote modernization and development of a digital financial platform on the basis of information technology application associated with digital transformation.

3- To promote financial potentials for the development of socio-economic infrastructure system; to prioritize funds for economic recovery and development tasks.

By Huong Diu/ Huyen Trang