State budget 2017 estimation: Collecting 1,199.6 billionvnd, 3.5% of GDP deficit

	Customs makes every effort to collect revenue
	Requesting Viet Nam Railway to pay into State budget over 131 billionvnd
	Collect more than 2,500 billion VND in State Budget from the mechanism for home use goods transferred through border gates

Inland Revenue increased 14% in 2017 could be a big challenge for the finance sector. (Photo: H.V)

In particular, the Government expects revenue growth of 16% over 2017 budget. There are opinions that this is a positive move but the government should also carefully calculate to run proactively and ensure the safety of the general balance.

Monitoring revenues closer

2016 is the year that Vietnam's economy faces many difficulties and challenges, such as economic growth is lower than expected; oil, gas prices continue to fall and are lower than estimated; disaster situation, epidemics; serious marine environmental pollutioncaused byHung Nghiep FormosaHa Tinh Limited Company in some provinces in the middle region; numerous enterprises wentbankruptcy, dissolved, or suspended business activities; growth of export turnover have not been reached etcThis context has had anunfavorable impact on task of collecting andexpenditure performance of the State budget.

Not just that, the subjective factors also bring huge impact as well. These include economic growth target in 2016 set off with high level was predicted having risks when taskswere assigned, difficult to implement and in fact it is likely not to achieve the plan (only 6.3-6.5% instead of 6.7%). A part of the cause is due to the forecast and analysisnot being realistic. The Budget and Finance Committee recommended to assess the growth more realistically, thereby determining the possibility of State budget more feasibly.

According to the latest report of the Government, in the first 9 monthsof 2016, State budget revenue reached 70.8% (same period last year reached 74.9%); total expenditures estimated at 68.4% (same period over the last year is 71.8%). Total State budget revenue in 2016 is predicted to increase over the estimate of 2.4% (24.500 billionvnd). Of which, domestic revenues increased by 5.6% over estimate; oil revenuesare predictedto reach just 72.5% of the estimate; export revenues lower than estimated by 2.9%.

Suggested examining the report, Mr. Nguyen DucHai - Chairman of the Budget and Finance Committee found out:the estimate that total budget revenues exceed the estimatesshows the efforts in the operating estimate ofthe State budget revenues of the government, but through the detailed data and the results of monitoring in a number of localities there are many difficulties and challenges to reach the estimatedlevel as the government reported.

Giving some suggestions, representatives of the Finance and Budget Committee said the Government needs to stay close to theState budget revenue estimates which were approved by the National Assembly through Resolution No. 99/2015/QH13 in 2016. Through the monitoring practice at some localities, ministries and corporations, showslots of difficulties due to the fact thatincreased revenue resulting from production, businessand service is not high. The Government needs to continue to monitor closely, with synchronized solutions, to remove difficulties and obstacles to complete the revenue estimates more certainty.

Besides, although domestic revenue increased in comparison to the estimate (5.6%, equivalent to 44,000 billionvnd), in fact, the increase was mainly due to policy adjustments andincreased revenuesfrom land. This also reflectsa slow economic growth, uneven in different fields, remaining difficult in the SOE sector. Specific data shows that, to achieve the implementation estimate as the Government reported the revenue of the State budget inthe fourth quarter of 2016 needs ahuge effort, especially for SOEs. There arelots of opinions that the collection of the State's sale of shares incompanies in the first 9 months of the yearwas slow (just over 10,000 billionvnd), butthe estimatefor the whole year to reach 30,000 billionvnd is very difficult.

In the last period of time, as well as the last months of the year, the Government, ministries, sectors and localities have been deploying more positive solutions in operating the State budget, however, monitoring shows that in general, unpaidtax arrears are still high, and potential tax arrears ishuge, at 30/6/2016 increased by 1.8% compared to 31/12/2015. This reflects the difficulty in production and business operation situation of companies, on the other hand, it shows that the Government should strengthen revenue administration, direct the relevant authorities against losses in non-State economyregions, pricetransferring, and tax debts.

Considering carefullyavoiding risks

Estimating for 2017, the Government has launched a number of large balances. Specifically: Total balance of the State budget in 2017 is expected to be 1199.6 trillionvnd, an increase of 16.7% compared to the estimate in 2016. Of which, domestic revenue is 977.7 trillionvnd; Crude oil revenues are 38.3 trillionvnd; export revenues are 180 trillionvnd; total expenditurs in 2017 is expected around 1,377.9 trillionDong; the budget deficit in 2017 is projectedat around 178.3 trillionvnd, equal to 3.5% of GDP. The expected ability to mobilize total investment of social development in 2017 is about 1,607.15 trillionvnd, equal to 31.5% of GDP. In particular, investment capital from the State budget is about 352.15 trillionvnd, accounting for 21.9% of total social investment capital; development investmentcreditcapital of the State is about 67 trillionvnd, accounting for 4.2%; SOE sector investment capitalis about 130 trillionvnd, accounting for 8.1%; private enterprises and residentialinvestment capital is around 750 trillionvnd, accounting for 46.7%; Foreigndirect investment (excluding the domestic contribution) is around 303 trillionvnd, accounting for 18.9%; the other mobilization funds is about 5 trillionvnd, accounting for 0.3%. About the ODA capital and preferential loans from foreign donors in 2017, the Government plans to sign about $US 4.7 billion, disburse about $US 5-5.2 billion. Disbursed funds arebalanced partly to the State budget, part-lending through financial institutions.

The estimate that is Government building is a positive one, but it might bring lots of challenges.

According to Mr. Nguyen DucHai, domestic revenue is 19.5% compared to estimated in 2016, if the levy excluding land use, income from lotteries, collecting from selling state capital in enterprises, dividend revenue and profit after tax, the domestic revenue increasing by 14% is quite high growth in the context where economic -societyare still having lots of difficulties, may pose a risk in the balance. Specially, to the SOE sector with 8% revenue increase is difficult, because in recent years, the average growth rate of this enterprisesector is only about 4-5%; Similarly, for non-State budget revenues to increase by 20% is a relatively high growth rate. Mr.Hai said that the Government should carefully calculate to ensure autonomy in operating the State budget.

On the State budget deficit, the government estimates in 2017 to be around 3.5% of GDP according to the Law on State Budget in 2015 is also a positive level, need to consistently implement this deficit level to ensure the public debt ratio in the safety limit, in case revenues do not reach the estimates, they must reduce spending, not increase the budget deficit. Where State budget revenuesincrease, the deficit reduction priorities in accordance with the State Budget Law. This should be considered as an important principle in operating the State budget for new budget stability for the period 2017-2020.

Giving his opinionon State budget expenditure estimates in 2017, the National Assembly Vice Chairman PhungQuocHien said thatState budget expenditures need to be restructured, implement roadmap graduallyand reduce recurrent expenditure in the spirit of expenditure savings; check and cut down someinefficient, unnecessary tasks in public spending; focus resources to allocate to increase spending on investment development reasonably, increase direct debt payments from the State budget. Mr. Hien also suggested some spending on education, health, and a 7% salary increase.

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