Budget deficit of more than VND216 trillion submitted to the National Assembly for consideration and approval

Minister of Finance Ho Duc Phoc

On behalf of the Prime Minister to present the "State budget settlement report for 2020" at the National Assembly meeting on May 23, Minister of Finance Ho Duc Phoc said, regarding to the final settlement of state budget revenue, it was estimated at VND1,539,052.8 billion; settlement was VND1,510,579.2 billion, dropping by 1.9% (VND28,473.6 billion) compared to the current appropriation.

In particular, central budget collection decreased by VND92,076.6 billion, local government budget collection increased by VND63,603 billion.

Regarding the finalization of state budget expenditures, the estimate is VND1,773,766.2 billion; final settlement is VND1,709,523.7 billion, equaling 96.4% (decreasing VND64,242.5 billion) compared to the current appropriation. In particular, the final settlement of central budget expenditure is VND647.851.1 billion, equal to 90% of current appropriation; the final settlement of local government budget expenditure is VND1,061,672.6 billion, equaling 100.7% of current appropriation.

Regarding the state budget deficit, the estimate decided by the National Assembly at the beginning of the year is VND234,800 billion, equal to 3.44% of GDP. In Resolution No. 128/2020/QH14 dated November 12, 2020, the National Assembly allowed to increase the central budget deficit by a maximum of VND133,500 billion.

At that time, the amount of state budget deficit allowed by the National Assembly was VND368,300 billion, equivalent to 5.41% of the planned GDP. The settlement of state budget deficit is VND216,405.6 billion, equal to 3.44% of GDP, dropping by VND18,394.4 billion compared to the estimate at the beginning of the year following the Resolution No. 86/2019/QH14 and reduced by VND151,894.4 billion compared with the level allowed by the National Assembly under Resolution No. 128/2020/QH14. In which, the central budget deficit is VND213,088.6 billion, the local budget deficit is VND3,317 billion.

The central government budget deficit covered by domestic loans is VND178,515.2 billion; foreign loans are VND34,573.4 billion.

“With the above state budget settlement results in 2020, the total state budget revenue in the five years from 2016-2020 reached VND6,918 trillion, equaling 100.8% of the plan; mobilization rate reached 25.3% GDP (the target was 23.5% GDP); revenue structure changed positively, towards a more sustainable direction, the proportion of domestic revenue by 2020 reached 85.6% of total state budget revenue (the target was 84-85%)," Minister Ho Duc Phoc said.

By 2020, there were 19 localities that achieved a budget revenue of over VND15 trillion (in 2016 there were 13 localities), 30 localities with over VND10 trillion (in 2016 there were 17 localities), 17 localities collected less than VND5 trillion (in 2016 there were 30 localities).

The head of the financial sector stated that there were many innovations in the allocation and use of the state budget; implementation of a 5-year financial plan, and control of budget expenditures within revenue capacity.

Total state budget expenditure for the five years from 2016-2020 is about VND7,325 quadrillion, equaling 91.3% of the 5-year plan. However, spending on investment and development in five years alone had been arranged to reach over VND2.2 trillion (planned is VND2 trillion). In particular, the estimated expenditure on development investment of the central government budget which has been arranged, reached VND1 trillion (reaching 90%), estimated expenditure on investment and development of the local government budget (including increasing revenue and cost savings) was about VND1.2 trillion (reaching 135% of the plan).

The proportion of expenditure on development investment was about 29% of the total state budget expenditure (the target was 25-26%). At the same time, it had been prioritized the implementation of major policies and orientations of the Party and the State on social security, implementing the multi-dimensional poverty line, ensuring spending on important fields such as education-training, medicine, environment, increasing the base salary, pension and preferential allowances for people with meritorious services.

The state budget deficit has been strictly managed and controlled, with an average of about 3.37% of GDP in the 2016-2020 period (the target is no more than 3.9% of GDP), a sharp decrease compared to the 2011-2015 period of 5.4% of GDP, especially in the context of unplanned economic growth in the same period and the negative impact of the Covid-19 pandemic in 2020.

The Minister of Finance said: “Thanks to controlling the state budget deficit and restructuring public debt, the public debt ratio had dropped sharply from 63.7% of GDP at the end of 2016 to 55.2% of GDP at the end of 2020; debt maturity is extended, mobilization costs are reduced, and national financial safety and security are strengthened, helping to create room to support economic growth, ensure social security, and respond to the pandemic.”

On the basis of the reported contents, the Government submitted to the National Assembly for consideration and approval the final settlement of state budget revenues and expenditures in 2020 as follows: The total balance of state budget revenue is VND2,279,735.6 billion.

Accordingly, the estimated state budget revenue is VND1,510,579.2 billion, revenue from source transfer from 2019 to 2020 is VND592,648.8 billion, revenue from 2019 balance is VND173,819.1 billion and revenue from the financial reserve fund following the provisions of the Law on State Budget Law is VND2,688.5 billion.

The total balance of state budget expenditure is VND2,352,929.8 billion. In particular, state budget expenditure is estimated at VND1,709,523.7 billion, and expenditure for source transfer to 2021 is VND643,406,1 billion.

The state budget deficit is VND216,405.6 billion, equal to 3.44% of GDP, including the central government budget deficit is VND213,088.6 billion, and the local government budget deficit is VND3,317 billion.