15:32 | 06/04/2018 Economy
(VEN) - According to the National Institute for Finance, state budget revenues in 2018 will face many challenges and efforts should be made to tighten expenditures.
Gross domestic product (GDP) growth in 2017 reached 6.81 percent, and state budget revenues surpassed projections. However, some revenues and taxes still recorded low rates. For example, revenues from state-owned and foreign-invested sectors accounted for 87.9 percent and 85.1 percent of the projections, respectively. In addition, revenue from the non-state sector only reached 93.1 percent of the estimation. Revenues from crude oil and export-import activities still accounted for a relatively high proportion of the state budget.
According to the National Assembly resolution on the state budget estimate for 2018, total collection will reach VND1,319 trillion, an increase of 2.8 percent compared to 2017. This is a big challenge for the financial sector, as Vietnam’s economic growth in 2018 is expected to reach 6.5-6.7 percent. This expected figure is lower than that of 2017, so it will be hard to expand revenues.
In addition, disbursement of public investment from the state budget and government bonds remains slow. In the expenditure structure, the proportion of regular spending accounted for 64 percent. The government needs to pay attention to these issues, as it may affect the budget deficit. The National Assembly agreed to set the budget deficit at 3.7 percent of GDP, of which 3.54 percent would be for the central budget’s deficit and the balance would be for local budgets. The government said the 3.7 percent deficit would ensure sufficient resources for development investment.
The National Institute for Finance recommended closely monitoring economic and financial developments to manage the fiscal policy, intensifying inspection and examination of taxes, strictly controlling tax refunds, stepping up measures against collection losses for transfer pricing activities, smuggling and trade frauds.
The government should strictly control expenditures, strengthen management and effective use of loans, tighten loans of local governments, effectively manage medium-term debts and step up divestment.
The National Institute for Finance recommends central management of income from equitization and divestments of state-owned enterprises and use of such revenues only for development investment purposes, not for regular expenditures.