Minister Dinh Tien Dung: Increasing capital expenditure and reducing recurrent expenditure

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Minister Dinh Tien Dung reported at the National Assembly’s Session on 23 October 2017.

Local revenue increases while State revenue decreases

According to Minister Dinh Tien Dung, from the beginning to now, the state revenue was estimated at 69.5%. This progress was lower than the last three years due to low revenues from business and production activities and equitization. The central budget was very difficult to reach 63.2% of the estimate; while the local budget basically reached 79% of the estimate.

Minister Dinh Tien Dung said that the State budget revenue in 2017 was estimated to exceed the estimate 2.3%, equivalent to 27,300 billion VND.

“The entire excessive revenue is from the local budget, but the local revenue depends on cars (Quang Nam, Vinh Phuc); hydroelectricity (Son La, Lai Chau); crude oil (Ba Ria-Vung Tau, Ca Mau), which is also difficult. The Government is directing drastic solutions to strive to achieve the highest results, especially the central budget collection, "- said by Dinh Tien Dung.

In terms of state budget expenditure, Mr. Dung presented that in 2017, strictly abide by Resolution of the National Assembly, the budget expenditure was carried out economically. The budget expenditure was estimated at 65.1% over the past nine months. Basing on speeding up the disbursement of investment capital, the budget expenditure of the whole year was estimated to increase over 23.3 trillion VND.

“In terms of budget balance, state budget deficit in 2017 was estimated at 178,300 billion VND, equivalent to 3.5% of GDP, however, this year's budget deficit is only 174,300 billion VND, down by 4 trillion VND compared to the estimate.

"In the spirit of proactive efforts, in the last months of the year, the Government is drastically guiding measures to manage the revenue and prevent loss of the revenue”. Mr. Dung reported

Budget balance still faces many difficulties

In terms of budget estimate 2018, the revenue was estimated at over 1.3 thousand trillion VND; budget deficit was estimated at about 3.7% of GDP, but the Government said that together with the orientation of deficit reduction in 2019 and 2020, the deficit rate was in the acceptable level.

According to the Minister, budget estimate for 2018 and the following years would base on the principles and orientations of step by step restructuring budget expenditure, increasing capital expenditure, reducing recurrent expenditure; saving, giving priorities for defense and security projects and issued social security policies and strictly managing loans ...

In addition, accompanying with the requirements of salary reform, the requirements for ministries, central and local agencies were saving money, reducing human resource, increasing non-business revenues and local revenue.

At the session, Mr. Dung reported that in terms of positive aspect, the budget structure was expected to continue moving towards increasing domestic revenue to 83.3% and increasing the proportion of development investment expenditure to 26.2%, reducing the recurrent expenditure to 64.1%.

However, the difficulty was that although the revenue was estimated too highly increase, the central budget revenue faced difficulties due to the reduction in revenue from crude oil and import-export. On the other hand, though the development investment expenditure from the central budget increased, the demand was low, so that the operation process required mobilizing additional external resources for this sector.

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At the same time, to adjust the basic salary, from 1 July 2018, pensions and preferential allowances for people who devoted the revolution increased by 7%. This requires the ministries, central and local agencies to ensure their revenue sources on the basis of saving and enhancing the financial autonomy of public non-business units and to use 50% of increased local budget revenue.