Restructure the source of expenditure - the fundamental solution to balance the budget

A regulation for the target of the cost-effective and saved budget highly controlled is what the government should aim at. Photo: Thuy Linh.

Spending grows faster than revenue does.

According to statistics from the Ministry of Finance, total state budget expenditure has increased continuously over the years. The expenditure in 2016 increased more than 3.3 times in 2006 and nearly 10 times in 2001. The total of expenditure in 2011-2015 was 1.65 times higher than 2006-2010 and 5.2 times higher than in 2001-2005. In the period of 2011-2015, the implementation of the policy of investment restructuring is to focus on public investment, the state budget expenditures shall be managed in the direction of strict control of public expenditures, including investment and recurrent expenditure at the same time to surely increase human spending and ensure social security.

However, the proportion of recurrent spending has increased rapidly. Specifically, the regular expenditures accounted for an average of 64.8% of total state budget expenditure, up nearly 10% over 2006-2010. The adjustment of the salary policy, the allowance for public duties and other social security policies have increased the share of human resources in total recurrent expenditures from 62.5% in the 2006-2010 period to 68 2% of the period 2011-2015. Meanwhile, due to the policy of restructuring public investment, the share of development spending in total expenditure decreased from an average of 28.6% to 21.7%. Payments for debt and aid after falling from 14.1% in 2006-2010 to over 10% in 2012-2013 will start to increase to 11.2% in 2014, reaching 13.2% by 2015.

Looking at the current state budget spending, Nguyen Thanh Long - Chairman of the Board of Directors of the State Securities Exchange (HNX) said that the current challenge is the size of state budget revenue in proportion of GDP that is the reducing tendency, but the scale of the state budget expenditure remains high, especially the pressure of increasing regular expenditure is still high. Total state budget revenue in 2015 is estimated to increase by 1.55 times compared to 2010, but the total expenditure increased to 1.77 times. In the period 2010-2015, the size of recurrent expenditure increased 2.04 times, but revenue from taxes, fees and charges increased only about 1.65 times. This trend has made the budget balance and plans for the reduction of state budget deficit difficult. The overspending in 2013 rose to 6.6% of GDP; 2014 is 5.69% and 2015 is 4.95%.

The overspending caused public debt in recent years to increase continuously. Although the budget still guarantees to pay both principal and interest when maturity comes, however, the restructuring is a drastic solution to reduce the deficit in the near future.

Combining the spending demands with the ability to mobilize the budget

At present, a number of solutions have been implemented by the Finance sector such as medium-term budget management to allocate resources for priority objectives in limited budget; Public investment restructure, investment capital from the state budget is only used for critical and urgent spillover infrastructure projects, the private sector projects for socio-economic development that the private sectors cannot do or do not want to do the regular expenditure control towards thrift, efficiency and fiscal discipline; promote the package of administrative expenditure, strictly controlling the use of public assets; Promoting self-control mechanism with public service delivery units, ...

Along with the continued implementation of the above solutions, according to Nguyen Thanh Long, the restructure of state budget expenditure should be implemented from the fundamental reform of the state budget management mode to linking the identification of budget expenditure needs with the ability to mobilize the budget, limiting the expansion of new spending policies while the revenue cannot be identified. In particular, clearly defining the content and scope of the state budget needs to ensure on the basis of selecting the strategic priorities of the economy in each period. The public investment reform, in which long-term strategic objectives should be identified, prioritizing resources for infrastructure development, education, training, science and technology to improve quality of human resource; Arranging certain resources for agriculture, rural areas and environmental protection, responding to climate change.

Along with that, the management of state budget expenditures, especially capital construction expenditures, recurrent expenditures, renovation of financial autonomy mechanism for public service delivery units in association with the strengthening of socialization for the activities of public services to improve the quality of health, education and cultural services and to reduce the burden on the state.

The same with this, Nguyen Quang Thai, director of the Vietnam Institute for Development Studies, said that restructuring the state budget spending is one of the basic solutions to ensure the sustainability of the state budget. In the course of implementation, it is necessary to determine the proper roles of the State and political system in order to have the valuable contents, to prioritize the allocation of resources; to improve fiscal discipline; consolidating the budget in combination with the restructuring of the economy, the reform of state enterprises, etc. On the orientation of restructuring the state budget expenditure, Thai emphasized the principles, such as: increasing the proportion of investment expenditures, gradually reducing the proportion of regular expenditures associated with the vigorous renovation of the public service sector according to the mechanism of autonomy and streamlining of the apparatus and payroll and implementing to reform salary.

Implement synchronous solutions to renovate modes and methods of budget and public debt statistics in line with international practices; attaching the importance to discipline and fiscal discipline; Ensuring the control of fiscal indicators within safety limits. The allocation of resources is done according to the priority targets. In addition, strengthening publicity and transparency and promotion of accountability is paramount.

In other words, in order to balance the budget and make the public finances grow sustainably, it is necessary to perfect a strict and effective control of budgetary savings.