Need to build stimulus package big enough for economic recovery in 2022

Chairman of the National Assembly’s Finance and Budget Committee of the Nguyen Phu Cuong

Gathering resources for pandemic prevention

Presenting the verification report on state budget implementation in 2021, state budget estimate, central budget allocation plan in 2022 and financial plan - state budget in three years from 2022-2024 at the National Assembly meeting, Chairman of the National Assembly’s Finance and Budget Committee of the Nguyen Phu Cuong said that in 2021, Vietnam’s economy would continue to suffer many negative impacts due to the Covid-19 pandemic.

The Party and National Assembly promptly promulgated many important policies, including financial policies to ensure national financial security, and support for people and businesses to overcome the pandemic.

The National Assembly Standing Committee issued many resolutions showing a determination to concentrate state budget resources on pandemic prevention; many mechanisms and policies on tax exemption and reduction, fees and charges, directly supporting people and businesses to overcome difficulties.

In 2021, the total state budget balancing revenues are estimated to exceed the estimate. However, Cuong pointed out, many important revenues did not meet or exceed the estimate.

“The central budget revenue shortfall was quite large, about VND28-29 trillion, which greatly affects the implementation of the central budget's tasks. In particular, revenue from selling state capital at State-owned enterprises reached 2.5% of the estimate. The Finance-Budget Committee requested the Government to clearly report on the subjective causes in order to have solutions in the future," Chairman Nguyen Phu Cuong said.

Basically agreeing with the Government's plan on the expected level of overspending, public debt and direct debt repayment obligation of the Government, the Finance-Budget Committee proposed the Government to have solutions to ensure the balance of state budget; at the same time, in the last months of the year, directing ministries, sectors and localities to closely monitor the situation and have a plan to proactively arrange sources when tasks arose.

Regarding the Government's proposal on using the residual salary reform source to spend on Covid-19 pandemic prevention and control; allowing the extension of the state budget investment plan from 2021 to 2022; supplementing the estimate of revenue and expenditure of foreign aid in 2021 of Quang Nam province, the Finance and Budget Committee basically agreed.

However, the Finance-Budget Committee suggested that the use of salary reform sources must ensure the right purpose, efficiency and specific use term. For the supplement of the estimate of foreign aid revenue and expenditure in 2021 of Quang Nam province, the Government was requested to direct the making of the estimate to ensure certainty, feasibility, and minimize the adjustment of the estimate.

Build a large enough economic stimulus package

Regarding the state budget estimate in 2022, the Finance and Budget Committee said that the state budget revenue estimate was built based on the expected economic growth of 6-6.5%, the inflation rate was about 4%, but the revenue growth rate was expected only 3.4% was not really appropriate.

In addition, the expected rate of mobilization into the state budget was about 15.1% of GDP, which was lower than the average as stated in Resolution No. 23/2021/QH15 of the National Assembly (not lower than 16% of GDP). Domestic revenue was estimated to increase by 3.8%, but in order to strive to bring the average domestic revenue in the 2021-2025 period to about 85-86% of the total state budget revenue following Resolution No. 23/2021/QH15, there was still a huge gap.

The estimation of three revenues from the production and business sectors was inadequate with the economic growth rate. In particular, for revenue from state-owned enterprises, which was only equivalent to the amount of the estimate in 2021, the expected level was still low.

“Besides that, in the 2022 state budget revenue estimate, it needed to take into account the decrease in revenue because it was possible to continue to implement the policy of exemption, reduction and extension of taxes, fees and charges in case the pandemic still negatively affected production and business," Chairman Nguyen Phu Cuong said.

Regarding the state budget expenditure estimate, basically agreeing with the plan submitted by the Government, the Finance-Budget Committee noted the principle of spending should comply with the Constitution, the State Budget Law, investment and recurrent expenditure quotas; and prioritize resources for pandemic prevention and control.

Notably, in terms of investment spending, it was expected to increase by 10.2% compared to the estimate in 2021, the Finance and Budget Committee said that the amount of capital proposed to be transferred to 2022 was quite large, suggesting that the Government should focus on disbursing public investment capital.

In particular, regarding the stimulus package to restore the economy, Chairman Nguyen Phu Cuong said that, with the serious impact of the Covid-19 pandemic on development, the goal of economic recovery and creating resources to ensure social security was an urgent and important task.

Therefore, it was very necessary to be determined, proactive and expeditiously deploy the stimulus package, restore the economy, and create leverage for growth. Therefore, it needed to comprehensively research, have a plan to balance the construction of an economic stimulus package with a large enough scale in order to create far-reaching and pervasive effects, ensuring the goals of economic recovery and social security.

“The Finance-Budget Committee proposes to research and use fiscal and monetary policies; research and select appropriate and necessary subjects to supplement the interest rate compensation support package; have an appropriate collection policy, taking into account the exemption, reduction and relaxation of taxes, fees and charges; consider reducing the payment of social insurance, health insurance and unemployment insurance; training and retraining workers,” Chairman Nguyen Phu Cuong said.