National Assembly adopts five-year financial plan
Legislators approved a resolution on the five-year financial plan with 86.64% of “yes” votes during the ongoing second meeting of the 14th National Assembly on November 9.
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The resolution targets total State budget collection for 2016-2020 at about VND6.86 quadrillion (US$308.7 billion), representing a 1.65 fold increase against 2011-2015, with domestic collection expected to account for 84-85% of the State budget collection.
The accumulated State budget spending in the next five years will be set at more than VND8.02 quadrillion (roughly US$361 billlion), of which development expenditures will make up 25-26% and regular expenditures, below 64%.
The combined development spending in the period will be no more than VND2 quadrillion (US$90 billion). Of the figure, spending sourced from Government bonds will be VND260 trillion (US$11.7 billion), including VND60 trillion (US$2.7 billion) left from 2014-2016. Based on reality, the allocation of development expenditures will be considered and decided by the National Assembly in annual State budget estimates.
Budget overspending in the next five years will not exceed 3.9% of GDP. Of the figure, the ceiling of central budget overspending will be capped at 3.7% and local budget overspending at 0.2%.
With that, budget overspending is expected to drop to no more than 3.5% of GDP by 2020, in an effort to balance the State budget and keep public debts within limits.
The resolution also aims to ensure the safety of public debts, which will be no more than 65% of GDP annually. Government debts will not exceed 54% of GDP and foreign debts no more than 50%.
The Government will allocate no more than 25% of annual total budget collection for debt payment.
Under the resolution, State budget collection policy will continuously be adjusted and supplemented towards raising the rate of GDP mobilisation to the State budget, higher domestic collection and decreasing income from crude oil, natural resources and exports-imports.
Duties will be reduced in line with free trade agreements to which Vietnam is a signatory.
State budget spending will be kept within limits between collection and spending. About 20% of the total budget spending is expected to be spent on education and 2% on science-technology.
Basic salary, pensions, and allowances for people who have rendered great services to the nation will increase by about 7% annually. Specific adjustments to the level will be discussed and decided by the National Assembly in annual State budget estimates.
State budget overspending will be cut and public debts will be restructured towards decreasing foreign debts and increasing local debts. The bond market will be built to limit international bonds and promote five-year Government bonds.
To achieve these goals, the resolution focuses on speeding up the completion of financial institutions and the national financial mechanism in an effort to realize the Constitution. The management of State budget collection and expenditures will be restructured towards an outcome-oriented approach meeting international standards, with budget overspending seriously tackled.
The scale and subjects of tax collection policies will be amended to cut down the number of those who receive tax reduction and property tax will be studied for supplementation. The incorporation of social policies into the tax law will be restricted, while tight fiscal and monetary policies will be implemented.
Financing for public agencies will be overhauled, with changes made to public services fees to ensure incomes of these agencies. Accordingly, the roadmap to align educational and medical fees with market rules will be designed.
Public spending will be restructured to support salary reform. The governance and performance of state-run companies will be improved. And, public debt is also set to be managed within the safe limit, the resolution says.
