Submission to National Assembly for approving State budget deficit settlement by over VND161 trillion

Ministry of Finance Ho Duc Phoc.

Under the authorization of the Prime Minister, presented the proposal to the National Assembly for approval of state budget settlement in 2019 at the National Assembly meeting, Minister of Finance Ho Duc Phoc said, based on regulations of Law on State Budget, the National Assembly's Resolution on state budget estimate in 2019; on the basis of summarizing the budget settlement of the local and municipal governments approved by the People's Councils of the province and appraising the budget settlement of the ministries and central agencies that already approved by the heads of the ministries and agencies. The Government reported the final settlement of the state budget in 2019.

Specifically, estimated state budget revenue is VND1,411,300 billion, settlement is VND1,553,611,589 billion, an increase of 10.1% (VND142,311,589 billion) compared to the estimate; mainly due to the increase in revenue collected from house, land, other budget revenues, import and export duty and revenue collected from crude oil; central budget increased by VND33,450.42 billion, local budget increased by VND108,861,169 billion.

State budget expenditure estimate is VND1,633,300 billion, settlement is VND1,526,892,949 billion, equal to 93.5% (decreasing by VND106,407,051 billion) compared to the estimate, mainly due to slow implementation of some expenditures, so the estimate was canceled or transferred to the next year for expenditure in accordance with the provisions of the Law on State Budget.

The ministries, central and local agencies have implemented budget expenditures in line with assigned targets and estimates, stabilized the macro-economy, and implemented social security policies.

Settlement of central budget expenditure is VND586,806,247 billion, lower than the estimate by 11.7%; final settlement of local budget expenditure is VND940,086,702 billion, lower than the estimate by 3.0%; the remaining are transferred to the next year for further use and some contents are canceled as complied with the provisions of Law on State Budget.

Regarding the state budget deficit and loans to offset the state budget deficit, the chief of the financial sector stated that, in Resolution No. 70/2018/QH14, the state budget deficit was decided to be VND222,000 billion, equal to 3.6% of GDP. The final settlement of the state budget deficit is VND161,490.73 billion, equal to 2.67% of GDP, decreasing by VND60,509.27 billion (1% of GDP) compared to the estimate decided by the National Assembly.

In particular, the local budget does not overspend, declining from the estimate of VND12,500 billion; the central budget settled VND161,490.73 billion, equaling 77.1% of the estimate, reducing by VND48,009.27 billion; 0.8% decrease in GDP compared to the estimate decided by the National Assembly.

Regarding the source to make up for the central budget deficit, the Government's report stated: domestic borrowing was VND123,312,361 billion; foreign loans was VND38,178.369 billion. The loans were diversified in terms of debt maturity, increasing the term of government bonds borrowed in the country, so that the average loan term in 2019 was extended.

Presenting the report on verification of the state budget settlement in 2019, Chairman of the Finance and Budget Committee of the National Assembly Nguyen Phu Cuong stated that the state budget revenue in 2019 exceeded the estimate by 10.1%, demonstrating the efforts of the Government in improving the business environment, implementing revenue management, administrative reform in tax administration.

However, the increase in revenue of 2019 mainly came from land, natural resources and from capital recovery of the state, etc., showing that the revenue structure is not sustainable, depending on many unstable and irregular factors. This limitation occurred in the whole of the 2015-2019 period, so it is necessary to determine the causes and responsibilities to overcome in the future.

In addition, recurrent expenditure still accounts for a high proportion of the total state budget expenditure, equaling 65.2% of the total settlement of state budget expenditure, higher than the set target of less than 64%. Recurrent expenditure accounts for a high proportion, besides objective reasons caused by large expenditures on social policies, also due to downsizing staff, rearranging the organizational apparatus that has not met the requirements; mechanisms, policies and autonomous implementation of public non-business units are still inadequate.

To improve the efficiency of state budget management and use, Chairman Nguyen Phu Cuong suggested that the Government should have solutions to increase the rate of implementation of the recommendations of the State Audit, and completely deal with the recommendations that have not been implemented since 2018 onwards; handle the responsibility of organizations and individuals that have not yet or have not implemented the recommendations of the State Audit.

“Besides that, studying, amending and supplementing regulations related to the autonomy mechanism in public non-business units to be appropriate with reality; overcome the shortcomings and limitations in the management of non-budget state financial funds, ensure the operational efficiency of the funds, not duplicate the tasks of the state budget, avoid waste, spread and disperse resources of the state," Chairman Nguyen Phu Cuong said.