Budgeting following the economic context for 2023

The 2023 budget expenditure estimate increases sharply for public investment spending, the main force of economic growth. Photo: ST

Revenue estimate predicts fluctuations in 2023

At the 4th session of the 15th National Assembly, the National Assembly issued the National Assembly's Resolution on the 2023 state budget estimate, which approved the 2023 state budget estimate with many essential targets. Regarding state budget revenue and expenditure, the target is a total state budget revenue of 1,620,744 billion VND; the total state budget expenditure is 2,076,244 billion VND. Thus, when the Resolution on the State budget estimate for 2023 was passed (October 2022), the total budget revenue in 2023 only increased by 0.41% compared to the estimated total revenue in 2022. However, by December 15, 2022, state budget revenue reached 1,691.8 trillion VND, 19.8% higher than the estimate and 78 trillion VND higher than the whole year's performance evaluation reported at the 4th session, XV National Assembly.

Setting a budget revenue target in 2023 with a relatively low increase at that time also received many opinions that this was a quite conservative target. However, according to Minister of Finance Ho Duc Phuc, the above estimate is suitable for the domestic and foreign socio-economic context forecast for 2023. Accordingly, the domestic and foreign socio-economic situations are developing fast and are difficult to forecast; challenging factors appear more and more, so to be proactive in operating, the certain and suitable construction of the state budget revenue estimate in 2023 with the capacity of the economy is a very urgent requirement.

According to the Ministry of Finance, some revenues that depend heavily on the external environment tend to decline due to the shrinking demand and market, such as revenues from import and export activities, in addition to depending on the market, prices, supply, the world's demand for goods, it also depends on the roadmap for implementing international commitments on tax; crude oil revenue depends on domestic crude oil extraction capacity and crude oil price in the world market. As for domestic revenue, recent economic fluctuations also require further solutions on fiscal policy to remove difficulties for production and business activities and maintain the economy's momentum of recovery and development.

Previously, Mr Nguyen Minh Tan, Deputy Director of the State Budget Department (Ministry of Finance), said that the macroeconomic situation in general and the state budget revenue situation in particular in the second half of 2022 is also facing problems, asking for timely solutions. This is also a premise for us to be proactive in operating. "In the first 6 months of 2022 alone, the average monthly rate was about 11% compared to the estimate, but from June until now, the progress was about 6% of the estimate, even in some months it only reached 4%. That shows that budget revenue is facing difficulties, stemming from the difficult production and business situation of enterprises from June until now," said Mr Nguyen Minh Tan.

Strong increase in spending on public investment - the main driver of economic growth

Regarding budget expenditure, the total state budget expenditure in 2023 is VND 2,076,244 billion. Compared to 2022, the structure of state budget expenditure in 2023 has changed dramatically with a sharp increase in public investment spending. Accordingly, the estimate of public investment expenditure accounts for 35% of the total state budget balance expenditure in 2023, an increase of 38% in absolute terms compared to the estimate in 2022, including an increase in ordinary investment under the medium-term public investment plan and an increase due to implementing several programs and projects following the National Assembly's Resolution No. 43/2022/QH on fiscal and monetary policies to support the program of socio-economic recovery and development.

According to the Ministry of Finance, prioritizing the allocation of development investment spending and creating a driving force for socio-economic recovery and development at both central and local levels is necessary to give priority to maintaining macroeconomic stability, controlling inflation, promoting growth and ensuring major balances of the economy in the context that the world economic forecast continues to be very complicated, unpredictable and even more difficult than in 2022.

Public investment resources will be allocated enough funds to carry out tasks in the Socio-economic Recovery and Development Program approved by the National Assembly, ensuring centralized capital allocation, avoiding spreading, and prioritizing national key projects and projects with pervasive and inter-regional impacts are significant for promoting fast and sustainable socio-economic development. Furthermore, public investment capital in 2023 will also be arranged to pay the outstanding debt for basic construction as prescribed fully, transition projects, especially those with good disbursement progress to complete the project, and allocate capital for newly started projects with enough investment procedures.

Regarding public investment, Mr Ho Sy Hung, Vice Chairman of the Committee for Management of State Capital at Enterprises, said that in 2023, public investment could be the lifeline for the economy. When the economy is in decline, increasing public investment is the solution to promote growth. Affirming that the loosening of targets to expand fiscal policy will increase resources for public investment, for this resource to be most effective, Mr Ho Sy Hung emphasized: "The capital flow for public investment must be going in the right direction, in the right field, on the right schedule to be able to promote economic growth and avoid wasting resources. The requirement to expand fiscal policy in association with public investment efficiency means to attach that capital inflow to areas that are effective for growth.

Assessing the driving force for economic growth in 2023, Nguyen Thi Huong, General Director of the General Statistics Office, said that public investment would also be bait for production activities, stimulating the economy's demand in the short term and long term. When consumption after the strong recovery period after the Covid-19 pandemic has shown signs of slowing down and foreign investment is still a mystery when currently registered capital has decreased despite an increase in realized capital, public investment is still the main driver of economic growth in 2023.