The National Assembly’s Finance and Budget Committee has agreed not to adjust the minimum wage in 2021 and has warned about the pressure on public debt payment.
The committee issued a report on inspecting the state budget implementation in 2020; the state budget estimate and the central budget allocation plan in 2021; and the implementation of the 2016-2020 national 5-year financial plan.
Regarding budget implementation in 2020, the committee reported that the state budget over-expenditure is at 4.99% of GDP, or 1.55% higher than the estimates.
Because of COVID-19, the receipts of the state budget have decreased, while spending is still being implemented, which has led to difficulties in budget balancing. The committee noted that the higher overexpenditure is reasonable.
However, it is highly possible that the state budget overexpenditure will increase by another VND38.5 trillion because of the failure to collect money from the sale of state capital in enterprises.
The committee has also pointed out the increases of the public debt indexes, warning that the government’s direct debt payment obligation may hit the threshold of 25% of total budget collection, which may affect the nation’s financial safety level.
Regarding the estimate of state budget collections in 2021, the government projects state budget overexpenditures of 4% of adjusted GDP in 2021.
The majority of members of the committee think this is an acceptable level. Others proposed keeping the state budget overexpenditure at below 4% (about 3.9%) so as to strictly control overspending from the first year of the next five-year national development plan 2021-2025.
As for public debt, the committee commented that the ratio of public debt to GDP has been decreasing in recent years, but the government’s debts are on the increase, which have nearly hit the ceiling level.
The government’s direct debt payment obligations hit the ceiling of 25% of state budget collections in 2020 and may become higher in 2021.
Replying to the government’s proposals regarding the 2021 state budget estimates, the National Assembly’s Finance and Budget Committee pointed out problems in implementation of the specific financial mechanism for some agencies and units.
The committee agreed with the government’s proposals not to adjust the basic wage and poverty line in 2021 to reserve resources for the fight against COVID-19 and other urgent tasks.
Increased spending on investment, and having overexpenditures and public debt to GDP ratio lower than the limits, have been cited by the committee as the achievements of the implementation of the five-year 2016-2020 financial plan.
However, it also cited many problems, including the low increase in the ratio of domestic collection to total collection increase, and the difficulties in collection source restructuring.