PREFACE
In the implementation of the State Budget Law and on the basis of the overall State budget plan and central government budget appropriation plan for fiscal year 2023 as proposed by the Government to the National Assembly, the Ministry of Finance herein prepares and releases this "Publication on the Government's 2023 State budget proposal to the National Assembly" to provide timely, complete and accurate information to readers that are interested in the Government's review of the State budget outturns in 2022 and the State budget revenue and expenditure proposal for fiscal year 2023 submitted to the 04th Meeting of National Assembly Session XV, for the latter's review and enactment.
This publication consists of 04 parts:
- Part I: Review of the State budget mandate execution in 2022
- Part II: Proposed State budget plan for fiscal year 2023
- Part III: The 03-year financial - State budget plan for period 2023-2025
- Part IV: Appendix tables of related data
We would like to welcome all inputs and opinions from organizations and/or individuals for increasingly efficient and transparent State budget planning process, in contribution to promoting socio-economic development and aiming at the best service delivery to the society and communities.
All comments, inputs and/or queries on this report should address the Ministry of Finance (the State Budget Department) - No. 28, Tran Hung Dao - Hoan Kiem - Hanoi.
Respectfully./.
Hanoi, October 2022
THE GOVERNMENT'S STATE BUDGET PROPOSAL FOR FISCAL
YEAR 2023 SUBMITTED TO THE NATIONAL ASSEMBLY
____________________
Part I
REVIEW OF THE STATE BUDGET MANDATE EXECUTION
IN FISCAL YEAR 2022
I. CONTEXT
The financial - State budget mandates for fiscal year 2022 were executed in the context of relentless Covid-19 impacts on the world economy, the armed conflict between Russia and Ukraine, China's strict pandemic lockdown policies, which slowed down supply chains and inflating the prices of foods, oil and other commodities; the monetary and fiscal policy adjustments in the US, EU and other major economies to control inflation, which all impact financial markets, global trade and investment flows.
On the domestic side, the Covid-19 pandemic has been well contained nationwide. In addition, support measures and policies under the Socio-economic Recovery and Development Program rolling out as relief for businesses and citizens have yielded important outcomes across the board. Macroeconomic conditions have been stable, with major economic variables well maintained within framework; sovereign credit ratings are improving; State budget revenue outturns were relatively satisfactory, growing year over year. Key economic sectors were recovering positively, with GDP growth at 8.83% in the first 9 month; manufacturing IIP reaching 9.6%, retailed sales of consumer goods and services growing by 21%; export turnover by 17.3%, resulting in an export surplus of USD billion 6.52; social protection policies have been well delivered, including welfare policies for policy targeted groups, including disadvantaged groups, the poor, workers, in addition to attention to healthcare for people. It is estimated that the GDP growth for the whole year will reach 8%, over-achieving the pre-defined target (6-6.5%), setting solid momentum in the coming years to achieve the economic growth targets for the 05-year period over 2021-2025.
Nevertheless, the economy is facing a number of challenges and confronting severe impacts and external shocks; with increasing demands for inflation controls; sluggish production - business activities in many areas; slow disbursement of public investments; severe climate change developments, with increasing the risk of natural disasters, typhoons, floods, landslides,... which all adversely impact the delivery of socio-economic development mandates and financial - State budget mandates in 2022.
II. ASSESSMENT OF STATE BUDGET REVENUE AND EXPENDITURE EXECUTION IN 2022
In view the socio-economic development above and the State budget mandate execution in the first 09 months, below is an assessment of the State budget revenue and expenditure outturns for the whole year 2022:
1. The State budget revenue
The State budget revenue was planned at VND 1,411.7 trillion. The estimated outturns for the first 09 month is VND 1,327.3 trillion, equivalent to 94% of the plan, increasing by 22% from that in the same period in 2021; the budget revenue outturn is assessed as positive, with revenue collection on track with the budget plan and/or growing year over year across regions, economic sectors and key revenues, in contribution to making resources available for the execution of spending mandates according with the budget plan and to finance the Socio-economic Recovery and Development Program.
The State budget revenue outturn for the whole year is estimated to be closed to VND 1,614.1 trillion, which is 14.3% higher than the budget plan (by about VND 202.4 trillion), and increasing by 2.9% from the actual outturn in 2021; accordingly, the State budget revenue ratio will be 17.2% of GDP, of which tax-and-fee revenue ratio will be 13.9% of GDP, as particularly set out below:
a) Domestic revenue
The revenue was planned to be VND 1,176.7 trillion. The revenue outturn in the first 09 months is VND 1,045.8 trillion, equivalent to 88.9% of the plan, increasing by 18.8% year over year.
In an effort to stimulate businesses and citizens, to finance the Socio-economic Recovery and Development Program and to curb inflation, the Ministry of Finance issued or proposed for relevant authorities to issue and adopt a number of fiscal policies (i.e. tax and fee exemption, reduction, tax and fee payment deferment, etc.). At the same time, the Ministry has been closely monitoring the enforcement of tax laws and other budget revenue mandates in 2022; while strengthening tax inspection, auditing, scrutinizing and sanctioning, to pre-empt aggressive tax planning at the expense of the State budget. It has been reinforcing tax collection, combat against tax evasion, and administration of tax on real estate businesses, e-commerce and digital platform based businesses. Efforts are continued for the acceleration of tax administrative procedure reforms to achieve consistency in institutions, procedures, organizational structure and modernization. E-services are being rolled-out to taxpayers, with the expansion of e-invoice application to all 63 provinces and the adoption of electronic processes in throughout the tax administration cycle.
Although the revenue outturn in the first 09 months was relatively satisfactory against the plan, absolute revenue has been declining in the recent months, as a result of the tax exemption, reduction and deferment policies amidst challenges in several industries, business lines and other economic activities. Domestic revenue outturn for the whole year 2022 is estimated to be about VND 1,292.3 trillion, which is 9.8% higher than the plan (or VND 115.6 trillion higher), but 0.9% lower than the actual outturn in 2021.
b) Oil revenue
The revenue was planned at VND 28.2 trillion assuming that the domestic production output will be 7 million tons at the price of USD 60 per barrel. The revenue outturn in the first 09 months was about VND 60 trillion, which is 113% higher than the plan. The actual oil revenue outturn for the whole year is estimated to be VND 68 trillion, which is 141.1% higher than the plan (VND 39.8 trillion higher), increasing by 52.3% from the actual outturn in 2021.
c) Net trade revenue
The revenue was planned to be VND 199 trillion; the actual outturn in the first 09 months is VND 216.5 trillion, which is 108.8% of the plan. As an estimate for the whole year, the net trade revenue outturn will be VND 246 trillion, which is 23.6% higher than the plan (VND 47 trillion higher), and 14% higher than the actual outturn in 2021.
d) Grants
The revenue was planned at VND 7.8 trillion; the actual outturn in the first 09 months is VND 4.94 trillion, which is 63.3% of the plan. The outturn is estimated to achieve the plan.
2. The State budget expenditure
The State budget expenditure was planned to be VND 1,784.6 trillion; the actual outturn in the first 09 months is 60.9% of the plan. As an estimate for the whole year, the State budget expenditure outturn will be VND 2,035.4 trillion, which is 14.1% higher than the plan. Below are the execution outcomes in several key expenditures:
a) Investment and Development expenditure
The original budget for capital expenditure is VND 526.1 trillion, as enacted by the National Assembly. The aggregate capital budget allocation as authorized by the Prime Minister for fiscal year 2022 is VND 542.1 trillion. The disbursement rate in the first 09 months remained slow against the plan and in year over year comparison; although the absolute outturn is 15.8% higher than that in the same period last year, but it is only 46.7% the plan authorized by the Prime Minister (compared to 47.38% for the same period last year).
The Government and the Prime Minister already held meetings with ministries and sub-national governments to explore ways to resolve problems and obstacles and to further motivate the sense of responsibility among Ministers, Heads of ministerial agencies, Government agencies, Chairpersons of the People's Committees of provinces and centrally administered cities; in an effort to accelerate public investment disbursement in 2022.
As an estimate for the whole year, the capital expenditure outturn will be VND 663.3 trillion, which is VND 137.2 trillion (+26.1%) higher than the plan1. Public investment disbursement for the whole year is estimated to be 96% of the plan authorized by the Prime Minister.
b) Interest payment
Interest payment was planned to be VND 103.7 trillion; the actual outturn was estimated at VND 72.6 trillion for the first 09 months, which is 70% of the plan. For whole year, it is estimated to be VND 99.7 trillion, which is VND 4 trillion lower (-3.9%) than the plan. This is mainly attributed to the fact that the G-bond issuance in 2021 closely followed the budget revenue collection and public investment disbursement outcome, to avoid floating debt and to lower borrowing costs. At the same time, ODA disbursement was low in 2021, which also reduce the interest payment planning for 2022. Debt service was settled fully and timely as committed, which further strengthens our sovereign credit ratings.
c) Recurrent expenditure
The original budget for recurrent expenditure is VND 1,111.2 trillion; the actual outturn in the first 09 month is estimated to be VND 758.8 trillion, equivalent to 68.3% of the original budget, which was responsive to the budget spending mandate requirements and timely responsive to emergency mandates in terms of pandemic controls, post disaster relief, social protection. In addition, 28.98 thousand tons of rice were released to provide relief for the aftermath of natural disasters, other and hunger relief for people.
The actual outturn for the whole year is estimated to be VND 1,119.2 trillion, increasing by VND 8 trillion (+0.7%) from the original budget, which is mainly attributed to the increase in sub-national spending financed by fiscal transfers made from the central government budget contingency provision for post disaster and pandemic relief and for the implementation of issued policies and entitlements, social protection policies.
3. The State budget balance
The original State budget deficit for fiscal year 2022 is planned to be VND 372.9 trillion as enacted by the National Assembly, equivalent to 4% of GDP, in which the central government budget deficit is VND 347.9 trillion and that for sub-national governments is VND 25 trillion.
In accordance with Resolution No. 43/2022/QH15, promulgating the fiscal and monetary policies for the delivery of the Socio-economic Recovery and Development Program, the National Assembly allowed that during the budget execution, the State budget deficit for fiscal year 2022 could be increased by 1.1% of GDP (by no more than VND 102.8 trillion) from the original budget plan enacted by the National Assembly, to make resources available for the implementation of the fiscal policies under the Program. Accordingly, the total State budget deficit for fiscal year 2022 can reach the maximum of VND 475.7 trillion (or 5.1% of GDP).
Considering above estimates of the State budget revenue and expenditure for the whole year, it is projected that the State budget deficit (including to finance the Socio-economic Recovery and Development Program) will turn out to be VND 421.3 trillion, equivalent to 4.5% of GDP, which is well within the budget framework enacted by the National Assembly. During the budget execution up to the end of 2022, it is targeted that the State budget deficit will be contained within 4% of GDP, to be within the enacted budget plan.
It is envisaged that as of end of December 31, 2022, in relation to the estimated actual GDP2, public debt will be about 43-44% of GDP, the Government debt will be about 40-41% of GDP and national external debt will be about 40-41%; the Government direct debt service will be about 18-19% of the total State budget revenue; these ratios are well within the debt ceilings and warning thresholds enacted by the National Assembly.
III. ASSESSMENT OF THE IMPLEMENTATION OF FISCAL POLICIES FOR THE DELIVERY OF THE SOCIO-ECONOMIC RECOVERY AND DEVELOPMENT PROGRAM
Following up on the National Assembly's Resolution No. 43/2022/QH15, dated January 11, 2022, the Government issued its Resolution No. 11/NQ-CP, dated January 30, 2022, and concurrently requested all ministries, agencies and sub-national governments concerned to actively embark on the assigned mandates and propose or urgent arrange for the implementation of State budget revenue and expenditure policies for the delivery of the Socio-economic Recovery and Development Program. By the end of September 2022, all necessary mechanism and policy documents to facilitate the implementation of the Socio-economic Recovery and Development Program were basically in place3. In addition, considering the volatility in the world oil price, the hike in petroleum and diesel prices, threatening inflation, pressurizing productive - business operations of enterprises and living conditions of citizens, the Government proposed to the Standing Committee of the National Assembly for the latter to issue Resolution on reduction of environmental protection tax levied on petroleum, diesel and greasing lubricants4.
As a result of the State budget revenue policies in the first 09 months of the year, the total cost of exempted and reduced and deferred taxes, land rents, fees and charges amounted to about VND 151.2 trillion, including VND 97.9 trillion from tax payment deferment, equivalent to 72.5% of the original plan (VND 135 trillion); VND 53.3 trillion from exemption and reduction, equivalent to 54.1% of the original plan (VND 95 trillion)5. If including the VND 6.7 trillion from tax exemption and reduction in accordance with Resolution No. 406/NQ-UBTVQH15, dated October 19, 2021, of the Standing Committee of the National Assembly, the total cost of tax exemption, reduction and deferment in the first 09 months of 2022 amounts to about VND 157.9 trillion. On the side of the State budget expenditure, supplementary transfers were notified to 22 sub-national governments at the total amount of VND 4,149 billion as of end of September 2022 for the implementation of the policy on rental support for workers in accordance with Resolution No. 43 (equivalent to 62.7% of the total package in the original program).
The above outcomes have contributed to easing the hardship and supporting enterprises and citizens affected by the pandemic, promoting economic recovery, social protection and stabilization of people's life.
IV. KEY ACTIONS FOR SUCCESSFUL ACHIEVEMENT OF THE STATE BUDGET MANDATES IN FISCAL YEAR 2022
With strong determination to achieve the best possible outcomes in the execution of the socio-economic development mandates and State budget plan for fiscal year 2022 as resolved by the National Assembly, in contribution to inflation control, macroeconomic stabilization, economic recovery and development, the following actions will be in focus in the remaining months of the year:
(1) To focus on timely and well-targeted implementation of fiscal and monetary policies for the delivery of the Socio-economic Recovery and Development Program, in an effort to achieve and over-achieve the pre-defined economic growth, finance - State budget targets.
(2) To focus on accomplishment of the mandates on institutional development and other financial - State budget initiatives in accordance with the work plan of the Government and actual requirements.
(3) To strengthen revenue administration; by accelerating measures to combat against tax evasion, transfer pricing, trade fraud; digital platform based commerce, and to strictly manage tax refunding.
(4) To execute State budget expenditure in compliance with the original plan, in a strict, thrift, economic and efficient manner, to ensure resource availability for the prevention and control of natural disasters, epidemics, and economic recovery. To focus on accelerating the implementation and disbursement of all funding sources within the 2022 plan; including in National Targeted Programs, the Socio-economic Recovery and Development Program.
(5) To continue resolute administration and adjustment of prices for important goods and public services that have the prices administered by the State, in particular petroleum and diesel prices, in contribution to support to the economy and control of inflation.
(6) To tighten fiscal and financial discipline; to reinforce inspection, supervision, scrutiny, public disclosure and transparency; to combat against smuggling, trade fraud, and to strictly follow-up on audit and inspection findings.
Part II
PROPOSED STATE BUDGET PLAN FOR FISCAL YEAR 2023
I. WORLD AND DOMESTIC ECONOMIC OUTLOOKS
On the external side, the slowing down world economy, with several major economies on the verge of depression, oil and commodity price hikes threatening global inflation, the world and regional political unrest, the climate change, natural disasters, epidemics,... all imply higher risks and more challenges to the economy of Vietnam. Building on the positive outcomes in the early months of 2022, the fiscal and monetary policies initiated under the Socio-economic Recovery and Development Program, among others... could be relied on as pre-conditions for the Vietnamese economy to regain the recovery momentum.
Positive outlooks are being published for the economy of Vietnam: The World Bank (WB) has recently lowered the global growth outlook, but Vietnam was the only economy having its economic growth raised in the outlook; the Asian Development Bank (ADB) stated that economic growth in Vietnam can reach 6.5% in 2022 and 6.7% in 2023; the International Monetary Fund (IMF) projected a 6.7% economic growth for Vietnam in 2023.
II. STATE BUDGET OBJECTIVES AND MANDATES
In view of the above world and domestic outlook and in consideration of socio-economic development mandates, the State budget objectives for fiscal year 2023 is set "To accelerate the implementation of fiscal policies in support of socio-economic recovery and development; to continue restructuring the State budget and public debt composition, in tandem with achieving efficiency gains in the mobilization and utilization of financial resources, in contribution to control of inflation, upholding of major economic variables within the framework, and achievement of the targets set out in the 05-year national financial, public debt borrowing and repayment plans for period 2021-2025; to make resources available for salary reforms and social protection policies in place; to strengthen the mechanism of financial autonomy and self-financing in public service delivery in accordance with the Central Party Resolutions.
Upon review of the State budget execution in fiscal year 2022 and the socio-economic development plan for year 2023 (targeting GDP growth to be about 6.5%, consumer price inflation (CPI) to average 4.5%, export growth to be about 8% from that in 2022), below is the proposed State budget estimates for fiscal year 2023:
III. STATE BUDGET REVENUE ESTIMATES
The aggregate State budget revenue is estimated to be VND 1,620.7 trillion in fiscal year 2023. Accordingly, the State budget revenue ratio will be about 15.7% of GDP, of which the tax-and-fee revenue ratio will be about 13.3% of GDP, as particularly set out below:
1. Domestic revenue is estimated to be VND 1,334.2 trillion, which is 82.3% of the aggregate State budget revenue plan, increasing by 3.2% from the estimated actual in 2022
2. Oil revenue is estimated to be VND 42 trillion, equivalent to 2.6% of the aggregate State budget revenue plan, on the assumed production output of about 8 million tons (1 ton is about 7.5 barrels), and the estimated price of about USD 70 per barrel.
3. Net trade revenue is estimated to be VND 239 trillion, or 14.7% of the aggregate State budget revenue plan. In which, the gross trade revenue estimate is VND 425 trillion, the estimate of value added tax refunding is VND 186 trillion.
4. Grants is estimated at VND 5.5 trillion.
Considering the above plan, the State budget revenue plan for fiscal year 2023 is about VND 209 trillion higher than that in 2022. This is a high-case revenue plan considering a lot of uncertainties in the world and regional economic context, whereas on the domestic side, production and business operations are still facing a lot of challenges in several sectors.
IV. STATE BUDGET EXPENDITURE ESTIMATES
1. Recommendations regarding the State budget expenditure allocation for fiscal year 2023 are set out below:
Firstly, to allocate adequately for the delivery of the Recovery Program as resolved by the National Assembly, and to allocate aggregate capital expenditure at the level higher than the State budget deficit for the implementation of public investment mandates in accordance with the Public Investment Law and other investment and development spending mandates in accordance with the State Budget Law; to allocate for timely and full debt services.
Secondly, to re-calculate the revenue sharing percentages (%) for the shared revenues applicable for the whole budget stability period as well as the balancing transfers for each of the sub-national governments in fiscal year 2023.
Thirdly, to allocate for the increase of base salary for cadres, civil servants, public employees; increase of pension payments and social insurance subsidies for the State budget targeted groups, and supplementary benefits for individuals retired prior to 1995 that receive lower benefits, preferential allowances for nationally merited people, several base-salary-linked social protection policies; adjustment of professional allowances for preventive health workers and grassroots health services; adjustment of the poverty standards for period 2021-2025; implementation of approved National Targeted Programs and other socio-economic development mandate; to allocate relevantly for contingency provisions and replenishment of national reserves, in compliance with regulations, to be timely responsive to emergency emerging mandates.
2. The State budget expenditure estimates for fiscal year 2023
The aggregate State budget expenditure estimate is VND 2,076.2 trillion for fiscal year 2023, which is VND 291.6 trillion higher (+16.3%) than that in 2022. Below is an indicative State budget allocation for several key spending mandates:
- Investment and Development expenditure will be VND 726.7 trillion, which is 35% of the aggregate State budget expenditure, increasing by 38.1% from that in 2022, to ensure sufficient resources for the delivery of mandates under the Socio-economic Recovery and Development Program.
- Interest payment will be VND 102.9 trillion, which is 0.8% lower than that in 2022.
- Recurrent expenditure will be VND 1,172.3 trillion, which is 5.4% higher than that in 2022. In which, the allocation for public administration, delivery of promulgated policies and entitlements, implementation of several National Targeted Programs, political mandates, external relations mandates, socio-economic mandates, personnel retrenchment... will be ensured.
V. STATE BUDGET DEFICIT ESTIMATES
In view of the 05-year national financial plan and resource requirements for the implementation of Resolution No. 43/2022/QH15, the State budget deficit is estimated to be VND 455.5 trillion for fiscal year 2023, equivalent to 4.42% of GDP (the central government budget deficit will be about VND 430.5 trillion, equivalent to 4.18% of GDP, sub-national government deficit will be VND 25 trillion, equivalent to 0.24% of GDP). In which, the deficit incurred to finance the Recovery Program will be about 1.53% of GDP, the pure State budget deficit will be 2.89% of GDP (compared to 4% of GDP for fiscal year 2022), which is considered positive.
The Government direct debt service will be about 19-20% of the total State budget revenue. As of end of 2023, public debt will be about 44-45% of GDP, Government debt about 41-42% of GDP, external debt about 41-42% of GDP. All are well within the statutory debt ceilings and warning thresholds set by the National Assembly.
VI. KEY ACTIONS FOR SUCCESSFUL EXECUTION OF THE STATE BUDGET PLAN FOR FISCAL YEAR 2023
Firstly, to continue pursuing consistently the objectives of maintaining robustly macroeconomic fundamentals, reigning inflation, upholding key economic variables within the framework, promoting economic growth, sustainably recovering and developing key socio-economic sectors. To actively and vigorously roll-out the mandates and actions under the Socio-economic Recovery and Development Program to ensure progress and quality in the implementation.
Secondly, to forcefully adopt measures for revenue increase, while striving for best possible achievement of the revenue targets to ensure resource availability, for the implementation of socio-economic development objectives on the basis of improving of State budget revenue institutions, policies and legislations and strengthening of revenue administration.
Thirdly, to continue restructuring the State budget in line with the objective on restructuring the economy, sustainable development; efficiency gains in the State budget management, allocation and utilization; strengthening of fiscal discipline, ensuring national financial sustainability, security and safety.
Fourthly, to enhance efficiency and effectiveness of the political system by continuing reforms, organizational restructuring, personnel retrenchment, reforms of the financial mechanisms among public service delivery units.
Fifthly, to continue restructuring and boosting performance of State-owned enterprises, with emphasis on State-owned economic groups and general corporations; while accelerating State-owned enterprise equitization and divestment.
Sixthly, to improve the legal corridors, check and balance to ensure smooth and sound operations of financial and financial service markets; to strictly sanction non-compliance and to promote fair competition across all economic players
Seventhly, to accelerate administrative reforms in combination with national digital transformation in a holistic and comprehensive manner, in the development of an e-government; to continue effective improvement of the investment and business environment, to promote national competitiveness, public disclosure and transparency.
Part III
THE 03-YEAR FINANCIAL - STATE BUDGET PLAN FOR PERIOD
2023-2025
1. Medium-term outlook over 2023-2025
The world and regional environment will continue to be uncertain, in particular the lengthened conflict between Russia - Ukraine has been dragging down the world economic outlook in the short-term. On top of that are the uncertain development of new COVID-19 variants and spreading inflation leading to monetary unwinding earlier than expected in several major economies...
On the domestic side, the investment climate is being improved, making Vietnam an on-going attractive destination for foreign investors; trade is being expanded, with export growth momentum being maintained thanks to recent free trade agreements. Nevertheless, the economy of Vietnam is not free from current major threads, including the lengthy conflict between Russia - Ukraine, increasing geopolitical instability, with the likelihood of surging shipping cost and merchandise prices and eventually "trade flows" disruption, which might slow down recovery, especially among merchandise imported economies. On the other hand, several internal weaknesses are not well addressed in the economy, including unsatisfactory productivity, quality, performance and competitiveness; uneven recovery across industries, limited capacity to access the digital economy and digital society...
2. Objectives of the 03-year financial - State budget plan over period 2023-2025
To strengthen the implementation of fiscal policies in support of socio-economic recovery and development, to continue restructuring the State budget and public debt in an effort to ensure the leading role of the budgetary central government, the pro-activeness of ministries, agencies and sub-national governments in their efficient mobilization and use of financial resources in contribution to control of inflation, maintenance of major economic frameworks and achievement of targets set out in the 05-year national financial plan, public debt borrowing and repayment plan over period 2021-2025; to strive for State budget revenue expansion, to maintain national financial prudence and sustainability; and to tighten financial - fiscal discipline.
3. Indicative 03-year State budget revenue and expenditure framework over 2023-2025
1. The State budget revenue: The State budget revenue is estimated to be about VND 5,178.4 trillion in the medium-term plan over 2023-2025, or 10.3% higher than that in period 2020-2022. The State budget revenue ratio will average about 15% of GDP, of which the tax-and-fee revenue ratio will average about 12.7% of GDP.
2. The State budget expenditure: The State budget expenditure is estimated to be about VND 6,473 trillion in the medium-term plan over 2023-2025, which is 1.15 times of the medium-term estimate for period 2020-2022.
3. The State budget deficit and public debt: It is estimated that the State budget deficit will be about 4.42% of GDP for fiscal year 2023. The budget deficit will decline in fiscal years 2024-2025 for convergence to the 05-year average budget deficit in accordance with the 05-year financial plan over 2021-2025. Public debt will be about 43-44% of GDP as of 2025, which will be lower than the statutory ceilings and warning thresholds set by the National Assembly.
4. Some recommendations and proposed measures
a) In the short-term
(1) To continue putting emphasis on market analysis, forecasting and close monitoring, so as to timely advise relevant response options to relevant authorities.
(2) To focus on the roll-out of measures in support of socio-economic recovery and development.
(3) To strengthen financial and fiscal management for alignment with objectives and priorities of the economy for improvement of living conditions for people.
b) In the long- and medium-terms
(4) To review, study and improve the legal and regulatory system on financial management, accounting, auditing regimes for various entities in the economy; to continue the course of decentralization and delegation of powers in parallel to enhancing the sense of responsibilities, public disclosure and transparency. To accelerate the implementation of measures to restructure the economy with focus on key components (i.e. State-owned enterprises, credit institutions, public investment, public service delivery units...) to achieve efficiency gains in resource mobilization and allocation.
(5) To continue improving the budget revenue collection system in line with the socio-economic circumstances of the country and international good practices; to review tax incentives, reduction and exemption policies that are no longer relevant to ensure fair treatment, transparency and to incentivize constructive competitiveness. To minimize the integration of social policies in tax legislations.
(6) To exercise the management, allocation and utilization of financial resources - State budget in relations to improvement of the mechanism of decentralization and delegation of powers and enhancement of the sense of responsibilities of Ministries, agencies and sub-national governments.
(7) To continue embracing the principles that State budget deficit financing will only be used for investment and development expenditure; and that expenditure will only be incurred within the affordability of the economy and debt will only be borrowed within the solvency of the economy.
(8) To tighten discipline in the management of finance - State budget, public debt and asset management; to strengthen inspection, supervision, auditing and scrutiny. To gather speed in the combat against corruption and wasteful practices in the management and use of public finance and public assets./.
1 This is mainly funded in addition by over-realized revenues from land use right transfers, lottery service incomes of sub-national governments; capital resources from external finance; resources made available for the Socio-economic Recovery and Development Program, projects being accelerated in 2022 and use of budget contingency provisions at all levels.
2 Estimated actual GDP 2022 is about VND 9.39 quadrillion.
3 The Government and/or the Prime Minister has promulgated: (i) the tax exemption and reduction policies in accordance with Resolution No. 43/2022/QH15 (Decree No. 15/2022/ND-CP, dated January 28, 2022, effective from February 01, 2022); (ii) excise payment deferment for car vehicles that are domestically assembled or manufactured (Decree No. 32/ND-CP, dated May 21, 2022, effective from May 21, 2022); (iii) deferment of payments for value added tax, corporate income tax, personal income tax and land rents in 2022 (Decree No. 34/2022/ND-CP, May 28, 2022, effective from May 28, 2022); (iv) interest rate subsidies for loans from the Social Policy Bank (Decree No. 36/2022/ND-CP, dated May 30, 2022 ); (v) State budget direct interest subsidies for loans borrowed by enterprises, cooperatives and household businesses (Decree No. 31/2022/ND-CP, dated May 20, 2022); a credit scheme for students and pupils in disadvantaged conditions for their purchase of computers and equipment for on-line classrooms (Decision No. 09/2022/QD-TTg, dated April 04, 2022); land rent subsidy policies for migrant workers (Decision No. 08/2022/QD-TTg, dated March 28, 2022); credit support policies for pre-school institutions, private and privately established primary schools (Decision No. 11/2022/QD-TTg, dated April 27, 2022). The policy on reduction of land and water surface rent for those impacted by Covid-19 in 2022 in particular was not yet promulgated as it was deemed necessary to assess the implementation outcomes in 02 years 2020 and 2021 before a relevant plan could be adopted.
4 Resolutions No. 18/2022/UBTVQH15, dated March 23, 2022; No. 20/2022/UBTVQH15, dated July 06, 2022.
5 This includes VND 63 trillion of tax reduction and exemption within the Socio-economic Recovery and Development Program; VND 32 trillion from environmental protection tax reduction for petroleum and diesel in accordance with Resolutions of the Standing Committee of the National Assembly No. 18/2022/UBTVQH15, dated March 23, 2022, and No. 20/2022/UBTVQH15, dated July 06, 2022, applicable in the period from the July 11, 2022, to the end of December 31, 2022.
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