Balance budget in 2021 before impact of Covid-19 pandemic

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Revenue from import-export activities rose due to the year-on-year increase in import-export turnover of taxable items in the past nine months of 2021. Photo: T.Hoa

State budget revenue projected to exceed target thanks to local budget revenue

Since April 2021 when the 4th wave of the pandemic appeared, the state budget revenue has tended to decline. Domestic revenue from taxes and fees fell by 10.8%, 21% and 26.5% in July, August and September respectively year-on-year, especially in provinces and cities implementing prolonged social distancing to prevent and control the pandemic.

According to the statistics from the Ministry of Finance, the domestic revenue of Ho Chi Minh City reached 72.8% of the estimate, Kien Giang province 68.1%, Dong Thap 67.6%, Can Tho 65.4%, Da Nang 65% and Tien Giang 60.8% of the estimate.

Revenue from import-export activities in August dropped sharply. Accordingly, August's revenue fell by about 31.4% month-on-month and September’s down 13.6% from August and 22.3% compared to the average revenue of the first nine months of 2021.

Facing complicated developments of the pandemic, the Ministry of Finance has proposed and promulgated many policies on tax exemption, reduction and payment extension and state budget payable to support businesses and business households to overcome difficulties with estimated funds of about VND140 trillion, of which the deferred amount of tax and land rent is about VND115 trillion; the exempted and reduced amount of taxes, fees, land rents, late payment interest is over VND25 trillion.

By October 15, 2021, the exempted, reduced and deferred amount of taxes, land rents, fees and charges was about VND95.1 trillion for about 120,000 businesses and nearly 20,000 business households and individuals.

However, thanks to the economic recovery momentum at the end of 2020 until the second quarter of 2021 and surge in some revenues, state budget revenue in 2021 is projected to exceed the estimate by VND22.2 trillion. However, the local budget revenue is expected to exceed about VND55 trillion, mainly due to land use fees (VND29.2 trillion). Meanwhile, the central budget revenue is expected to miss VND28-29 trillion, mainly due to the slow progress in the equitization of enterprises.

In 2021, some domestic revenues spiked year-on-year, such as revenue from commercial banks (VND11.2 trillion), revenue from real estate business (VND15.6 trillion), securities (VND4.6 trillion), revenue from automobile production and assembly (VND14.5 trillion) and some other revenues.

Along with that, revenue from import-export activities grew due to a 33% increase in import-export turnover of taxable items in the past nine months of the year.

Cut unnecessary spending tasks

Regarding state budget spending in 2021, the state budget plans to increase spending on pandemic prevention and control activities, including purchasing vaccines, medical equipment, implementing specific regimes to prevent the pandemic and support people hit by the Covid-19 pandemic according to Resolution 68/NQ-CP of the Government.

As of October 15, the state budget spent VND45.6 trillion on pandemic prevention and support. The Ministry of Finance said the state budget expenditure for the whole year is estimated at VND1,709.2 trillion, VND22.2 trillion higher than the estimate. Of which, VND489.9 trillion is spent for development and investment and VND1,059.2 trillion is for recurrent expenditures.

The Ministry of Finance expects, for the central budget, the ministry will strive to increase state budget revenues, review and reduce unnecessary spending. For local budget, the local budget revenue is expected to exceed about VND50 billion of the estimate. However, some localities failed to ensure budget balance.

As of early October, 2021, the remaining fund of localities was about VND25 trillion, including Hanoi with VND13.5 trillion and others that have not been affected by the pandemic.

In addition, it is expected by 2021, some localities have high remaining funds from salary reform but under the current regulations, this fund is only for employees and employers severely impacted by the Covid-19 pandemic according to Resolution 68 of the Government.

State Treasury to run the pilot programme on automated payments

Therefore, to have funds for combat against the pandemic in the near future, the Ministry of Finance has requested local authorities to actively use local sources and re-order spending tasks. The central budget will help local authorities that are facing difficulties in balancing budget for anti-pandemic work and social welfare. With that determination, the Government has strived to keep the state budget deficit in 2021 within 4% of GDP. Of which, the local budget deficit may be lower than the estimate due to the low foreign capital disbursement.