The Finance Sector balances the budget to respond to Covid-19 pandemic

The State budget has spent about VND9,500 billion, including both central and local budgets, to purchase medical equipment and devices for the prevention of Covid-19 epidemic. Photo: collected.

Spending VND55 trillion on disease prevention, combat and support

At the Government meeting with localities last week, Minister of Finance Dinh Tien Dung said that the State budget was prioritizing resources of VND16.2 trillion to prevent and combat epidemics, focusing on priority regulations and policies for the forces participating in the prevention and control of Covid-19, food and medical expenses for isolated people; procurement of medical equipment, supplies and direct cash support from the State budget for people affected by Covid-19, ensuring social security and safety.

In fact, according to the Ministry of Finance's statistics, the State budget has spent about VND9.5 trillion including both central and local budgets to buy medical equipment and supplies to prevent and control Covid-19. It is expected that spending may need to be increased in response to this pandemic in the future.

About VND6.7 trillion would be spent to give priority to the forces participating in the prevention and control of the Covid-19 epidemic; expenses for meals of isolated people, for their medical examination and treatment during the isolation period.

In addition, the State budget also prioritizes the allocation of about VND36 trillion to implement the Government's Resolution in direct support of cash for six groups with deep income reduction, loss, underemployment, difficulties and no ensuring minimum living standards, being affected by Covid-19 epidemic; additional support for a number of groups enjoying preferential and social protection policies during the epidemic. Not to mention, the initiative to allocate resources to strengthen national reserves (mainly food), supporting people in areas affected by natural disasters and epidemics, ensuring no one goes hungry.

The spending pressure is quite large, but in the face of difficulties in production, business, trade and investment activities due to the impact of the Covid-19 pandemic, it is forecasted that the State budget revenue in 2020 will decrease. The first reason is low economic growth. This year, Vietnam forecasts growth at around 5% but international organizations are not so optimistic. The International Monetary Fund forecasts that Vietnam is only 2.7%, the World Bank forecasts 4.9% and the Asian Development Bank forecasts 4.8%.

Along with that, the price of crude oil plummeted; adjusting the State budget collection policy to remove difficulties for enterprises and business households coping with epidemics; the slow progress of enterprise restructuring and equitization are also big risks for the State budget estimate in 2020.

The difficulties caused by the Covid-19 pandemic have greatly affected the State budget revenue and expenditure balance. According to the provisions of the State Budget Law, if the expected revenue does not reach the estimate, it must consider and adjust a corresponding reduction of some expenditures to ensure the State budget balance. However, in the condition that more resources are needed to support the economy and reduce difficulties for enterprises and people for the impact of the epidemic, it is still required to keep the development investment expenditure estimates, expenditures for personal regime and policies, even increasing social security spending.

Cutting at least 30% of conference and assignment expenses

According to the head of the Finance sector, the Ministry of Finance is currently planning that, in the most positive plan (the epidemic would end in the second quarter of 2020), GDP growth would reach about 5.3% (down 1.5% compared to the plan), the annual average oil price would be about US$35 per barrel, collection from equitization and divestment of State-owned enterprises could not be implemented, the State budget revenue would be estimated to decrease by about VND140-150 trillion, of which, Central budget revenue decreased by VND100-110 trillion, local budget decreased by VND40 trillion.

In case GDP growth could not reach the above-expected level (below 5% as forecasted by the international organizations), the State budget revenue would decrease more, especially the budget revenues in key economic areas affected by the stagnation of services, tourism, trade, logistics, such as Hanoi, Ho Chi Minh City, Da Nang, Quang Ninh and Hai Phong.

In the context that the State budget revenue is forecasted to decrease deeply, but still must ensure development investment spending, increasing social security and disease prevention, the Ministry of Finance has proposed the Government and the Prime Minister solutions on balancing resources to ensure State budget spending.

In particular, the most resolute is to request ministries, branches and localities to review and cut at least 30% of conference expenditure, expenses for domestic business trips and 50% of overseas working missions.

Doing this well, central agencies alone are expected to save about VND600 - 700 billion.

In the spirit of sharing responsibility between the Central Government and localities in allocating resources for the task of preventing and fighting Covid-19 epidemic, implementing policies to support workers and social security in the area, the Ministry of Finance is also proposing that localities must actively use budgets from the increase of local budget revenues and surplus funding for salary reform with using financial standby and reserves of local budgets to deal with problems.

The localities are expected to balance about VND13-14 trillion from the financial standby and reserves, increasing revenues, spending savings, surplus funding for salary reform and other local legal resources. For disadvantaged localities, the Central Government will provide support at the levels of 30%, 50% and 70% of the actual funding generated in the locality.

For the Central budget balance, the Ministry of Finance is planning on spending VND34.6 trillion of revenue increasing sources and the remaining central budget revenues in 2019 to transfer to 2020, of which, it is expected to spend VND20 trillion and the local budget to implement support policies for workers and social security according to the Government's Resolution. The remaining VND14.6 trillion will continue to be used for the prevention of Covid-19 epidemic and support for the Central budget balance.

Regarding proposals from some international organizations to lend money to Vietnam, the Ministry of Finance has reported to the Prime Minister and is negotiating with these donors to get the most favorable loan conditions. It is expected to be able to borrow from these organizations about US$1 billion with low cost. Along with that, the Ministry of Finance submits to the Prime Minister the corresponding reduction of the domestic loan proportion when making additional loans from international organizations in order for the implementation of the National Assembly's Resolution on the annual State budget estimates of 2020.