State budget surplus in 2019

	In 2019, State budget revenue and expenditure in cash through treasuries drops sharply
	State Treasury managed state budget flexibly and reduce waste in 2019
	Prime Minister assigns State budget estimates in 2020

The increase in State budget revenue does not stem from the main revenue of the production and business activities of businesses, but an unsustainable factor. Photo: H.P

What are causes?

Facing advantages and difficulties in 2019, the finance sector made a record when it maintained a State budget surplus from beginning to the end of the year. Until the end November, the State budget balance reached VND 1,376.4 trillion, up 11 percent compared to 2018. Meanwhile, total State budget expenditure was VND 1,261.9 trillion. The State budget has a surplus of VND 114 trillion.

The achievement has come from objective advantages, but it is undeniable that great efforts of the finance sector helped. Firstly, boosting economic growth through reforming administrative procedures and removing difficulties for enterprises was key. The whole finance sector has coordinated closely with ministries and sectors to promptly handle problems for enterprises and help enterprises expand and develop production and business. These solutions have brought many impacts, contributing to reducing operating costs for enterprises, boosting competitiveness, creating equality and convenience for enterprises to access resources and business opportunities. If the operations of enterprises and economic development are good, State revenue will increase. In addition to creating favourable conditions for production and business, the finance sector has also strengthened inspection and examination for enterprises with high risks and violation signs, as well as implemented solutions to recover tax arrears, combat smuggling, trade fraud and revenue losses.

The budget revenue structure has been operated more and more sustainably. In 2019, revenue from three economic sectors, including State-owned enterprises, FDI enterprises and non-State enterprises increased by 10.9 percent, higher than expected economic growth and inflation and higher than in previous years. Revenue from assets, resources, land, and mining increased higher than the estimate but overall, these revenues accounted for a small proportion and decreased. For example, revenue from mining rights only made up 0.3 percent of total State revenue, revenue from land and housing only accounted for 8 percent. Revenue from production and business was still key to revenue. The proportion of domestic revenue increased. Domestic revenue in 2019 and 2020 is expected to reach about 83.6 percent of total revenue, revenue from import and export and crude revenue reduces from 36 percent to 23 percent in this period and 10 percent in the near future.

Regarding State budget spending, the finance sector still ensures strict, thrifty and efficient budget spending and provides the best support for socio-economic development goals. From the beginning of the year, implementing Directive No. 31 / CT-TTg of the Prime Minister, the Ministry of Finance issued a written request to budget estimate units under the Ministry of Finance to strengthen discipline and rules in compliance with the provisions of the Law on State budget. Minister of Finance Dinh Tien Dung said facing requirements of national development, spending demand is huge, especially spending for investment in developing infrastructure, social welfare, hunger eradication and poverty alleviation, developing the new rural programme and disaster recovery caused State budget deficits. Therefore, we need to closely control regulations on budget spending.

The State budget deficit was controlled, equal to 3.4 percent of GDP, of which, the central budget deficit was in the estimate, local budget balance was not in a deficit. By 2020, the deficit is estimated at 3.44 percent of GDP. Thus, the average State budget deficit of the whole 2016-2020 is about 3.6 to 3.7 percent of GDP, exceeding the target of 3.9 percent. Thanks to effective control of the State budget deficit and government guaranteed loans, growth of public debt has decreased by more than half and been lower than the nominal GDP growth rate. If in 2011-2015, the growth rate of public debt was 18.1 percent per year, while nominal GDP was 14.5 percent a year, in the period 2016-2018, the growth rate of public debt was 8.2 percent per year, nominal GDP increased by 9.7 percent per year. Until now, the public debt ratio at the end of the year stood at 56.1 percent of GDP; Government outstanding debt was equal to 49.2 percent of GDP; the country's external loans were equal to 45.8 percent of GDP. It is estimated that the public debt ratio by the end of 2020 will be about 54.3 percent of GDP, while in 2016, it was 63.7 percent of GDP.

Happy or worry?

In other respects, we cannot deny the "surplus" story has been contributed by interesting areas.

For example, imports of cars from some ASEAN markets (with tax reduction to 0 percent) soared in the first months of the year, making import-export revenue suddenly jump four times compared to the same period in 2018. At this time, the increase in budget revenue did not come from the main revenue of production and business activities of businesses but unsustainable factors.

For example, budget expenditure for development investment at the end of the year only reached 54 percent. While public investment disbursed through the State Treasury under the plan 2019 stopped at only 63.7 percent of the plan assigned by the Government. A series of large projects on electricity, roads, schools, stations, agriculture and rural areas have been implemented slowly and some lasted up to 10 years and have not ended due to a lack of capital while the State is "in surplus". Low disbursement made the spending rate decrease, which indicates poor use of capital and may lead to growth stagnation.

In 2020, the National Assembly approved the State budget estimate with total State budget revenue of VND 1,512.3 trillion, total State budget expenditure of VND 1,747.1 trillion and a State budget deficit of VND 243.8 trillion, equal to about 3.44 percent of GDP.