Minister Dinh Tien Dung: good apparatus and personnel organization will promote restructuring of budget spending

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Minister Dinh Tien Dung spoke at the group discussion session on October 22nd

Revenue from production and business still key

According to the Minister, along with economic growth and macro stability, total state budget revenue in recent years has reached and exceeded estimates. Revenue estimates are based on economic growth of about 6.8 percent and inflation of 4 percent, but budget revenue is always higher than economic growth. The mobilization rate to the budget is about 24.4 percent of GDP and tax is 21 percent of GDP, reaching the set target. In 2019-2020, this rate will be lower, but the average will still reach the set goal.

Along with that, budget spending is actively managed. Development investment spending is higher than the previous year, and about 26.9 percent of total state budget spending will be implemented by 2020 and the 27-28 percent of total budget spending will be implemented for the whole period, higher than the set target (the whole period goal is 25-26 percent).

Recurrent spending is targeted at less than 64 percent, but in 2020, it is estimated at only 60.5 percent of the total state budget spending. Recurrent spending has plummeted, while ensuring the source of an average salary increase of more than 7 percent.

Expenditure deficit and public debt dropped sharply, while the growth rate of public debt has dropped by more than half. If in 2011-2015 it was more than 18 percent, in this period, it is just over 8 percent. More importantly, public debt has been restructured compared to before, with the average repayment term of bonds and domestic loans at nearly seven years, while in 2011-2012, it was 2.9 years. The average interest rate for the period of 2011-2013 was 12-13 percent per year, but in the recent two years, it was about 4.6 percent, for 13-year terms.

Regarding the opinion that the budget revenue is not really sustainable and revenue from three economic sectors (SOEs, FDI enterprises and non-state sector) have not reached estimates and the increase in revenue is mainly from natural resources, Dinh Tien Dung said that this is because of objective and subjective reasons.

Subjectively, to have more resources, the revenue was estimated at a high level. Overcoming this problem, in 2018-2019, the Ministry of Finance has gradually changed and revised down estimates to meet the reality of the localities. In this context, revenues from crude oil, imports and exports, and land use hardly grow. In 2020, the revenue from crude oil is estimated at only 2.3 percent of the total budget revenue; revenue from import and export activities is estimated at only 13.8 percent; and revenue from land is only 6 percent of the total budget revenue. Thus, revenues mainly focus on the three economic sectors, accounting for the largest proportion of total budget revenue – about 44.8 percent.

Objectively, the macro-economy has maintained stability and inflation has been controlled, but many enterprises still face difficulties and production capacity was not stable, especially for SOEs, so it was difficult to gain high growth.

Affirming the increasingly sustainable budget, Minister Dinh Tien Dung said that in 2019, revenue from the three economic sectors increased by 10.9 percent, higher than estimated economic growth and inflation and higher than those in previous years (2016, it increased by only 9.9 percent, in 2017 by 5.6 percent, and 2019 by 9.7 percent). The proportion of revenues in the three sectors has also increased over the years. If in 2017, it accounted for 39 percent, in 2019 it was 42 percent. The mobilization rate from taxes and fees of these three sectors also accounted for 10.2 percent of GDP areas compared to GDP of the period 2016-2019; 9.9 percent higher than the period of 2011-2015. Thus, the three economic sectors are developing very fast, showing the sustainability of the state budget.

In contrast, revenues from assets, resources, land, mining have increased compared to the estimate but accounted for a small proportion and gradually decreased. For example, revenue from mining rights accounted for only 0.3 percent of the total state budget revenue, while revenue from real estate accounted for 8%.

“Therefore, revenue from production and business is still an important and key revenue, revenue structure has shifted more positively, the proportion of domestic revenue has gradually increased. It is estimated that this year, next year, domestic revenue will be about 83.6 percent of total revenue, the revenue from imports, exports and crude oil will gradually decrease from 36 percent in the previous period to 23 percent in this period and to 10 percent in the future period,” the Minister affirmed.

Mobilisation rate decreased

Regarding the opinion that the mobilization rate from taxes, fees and charges failed to meet the target of 21 percent of GDP, the Minister said the mobilization rate is tending to decrease. In 2019 it is expected to be 20.2 percent and 19.4 percent in 2020, while it was over 21 percent. Despite the decrease, it is expected that the average rate of 5 years still reaches the set target.

The decrease in the mobilization rate is firstly due to the rapid reduction in revenues from crude oil and import-export activities, while the implementation of measures to adjust the revenue policy under the National Assembly's Resolution No. 25/2016 / QH14, particularly adjusting the corporate income tax, value added tax, personal income tax, natural resource tax and property tax, faced a lot of difficulties.

In fact, from the beginning of the year, the Finance sector has implemented synchronous solutions for revenue management, assigned tasks to each cadre and civil servant at all levels to manage tax, urge tax and tax debt collection as well as conduct tax inspection. Therefore, the revenue from tax debts is always higher than the previous year and the average revenue from outstanding debts reaches 80 percent.

Regarding the opinion that the restructuring of state budget spending is slow, the Minister said that the restructuring of state budget spending under Resolution 07-NQ / TW of the Politburo and Resolution 25/2016 / QH14 of the National Assembly is being implemented effectively and practically.

It is worth noting that the Minister pointed out that during the implementation process, it is evident that the reciprocal support between the personnel reduction and the restructuring of state budget spending.

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"For example, if personnel was reduced by two percent, we will have two percent for wage reform. Therefore, if the restructuring and reform of public non-business units is accelerated, it will greatly contribute to the restructuring of state budget spending. Therefore, the participation of all agencies and sectors is needed to create more favorable conditions for the administration of the state budget,” the Minister emphasized.