15:22 | 25/09/2017 Finance - Banking
Budget revenue over GDP has fallen from 26.3% during the 2006-2010 period to 23.6% of GDP between 2011 and 2016, Finance Minister Dinh Tien Dung has confirmed.
|The Vietnam Finance Forum opens in Hanoi on September 21 and discusses public finance reforms towards sustainable development in Vietnam - Credit: VGP|
The minister’s statement was made during the opening of Vietnam Finance Forum in Hanoi on September 21. Under the theme of "Public Finance Reform towards Sustainable Development," the annual event was organised by the Ministry of Finance with the support of the US Agency for International Development.
Minister Dung affirmed that the Vietnamese public finance has been renewed in the direction of being increasingly transparent, effective and sustainable; however, it also faces a range of challenges and certain risks.
Among these risks is the issue of budget size compared with GDP decreasing rapidly with the unreasonable structure of revenue. Particularly, in the 2006-2010 period, budget revenue reached 26.3% of GDP (of which revenue from taxes and fees was at 22.6% of GDP), and during 2011-2015, budget revenue only accounted for 23.6% of GDP (of which tax revenue was at 20.8% of GDP).
Meanwhile, the demand for budget spending has been constantly exceeding the ability to balance resources, leading to difficulty in balancing the state budget, overspending and low budget accumulation for development.
In addition, public debt and repayment obligations have increased rapidly, with large repayment pressure in the short term, potentially causing danger, but have not been secured yet. The basic construction budget repayment and budget advances are still large, with inadequate management and use of such capital, plus ineffective use of public funds.
Amidst the difficult context, the Politburo issued Resolution No. 07-NQ/TW dated November 18, 2016 on policies and measures to restructure state budget and public debt management to ensure national financial security.
Accordingly the goal was set by 2020 thus the tax policy system will be revised to cover all revenue sources, expand the collection base, especially in regards to new revenue sources in line with international practice.
Policies on state budget expenditures will be changed in order to increase the ratio of investment expenditures to gradually reduce the proportion of regular expenditures associated with vigorous reforms of the public service sector towards strengthening financial autonomy.
With regard to public debt management, the finance minister emphasised the need for the improvement of institutions, policies, tools and public debt management apparatus to ensure compliance with the Constitution, relevant laws and international practices, while strengthening public debt restructuring, strictly controlling foreign debt within the allowable limits and improving the efficiency of loan utilisation.
Minister Dung said that the restructuring of the state budget and public debt is not only to increase revenue and control public debt, but also to develop the budget and debt system supporting the building of a healthy business environment, with a neutral, transparent, and convenient collecting system, along with the renewal of policies and regulations on public spending and effectively managing and distributing scarce resources for socio-economic development and national financial security.
Experts at the forum suggested that in order to gradually reduce the budget deficit, there must be public investment reform, in which clearly defining the strategic objectives in regards to long-term spending, focusing on allocating resources to infrastructure development, science and technology and rural and developments in the agricultural sector.
At the same time, it is necessary to review and further improve the efficiency of allocating, spending and using capital, while intensifying the supervision, inspection and coordination among state management agencies in the allocation and use of budget capital.
This year's event gathered nearly 200 delegates who are managers, policymakers, experts and economists nationwide and from international organizations and enterprises. The delegates discussed public finance reform towards sustainable development in Vietnam.