Published Report State Budget Final Account Settlement for the Fiscal Year 2021

Published Report State Budget Final Account Settlement for the Fiscal Year 2021 31/08/2023 03:30:00 156

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PUBLISHED REPORT

State Budget Final Account Settlement for the Fiscal Year 2021

 

In the State Budget Plan for fiscal year 2021 as enacted by the National Assembly, the aggregate revenue was VND 1,343,330 billion, the aggregate expenditure was VND 1,687,000 billion, and the state budget deficit was VND 343,670 billion, equivalent to 4% of GDP. This deficit includes VND 318,870 billion of the central government budget deficit and VND 24,800 billion of the sub-national government budget deficit.

In 2021, the global Covid-19 pandemic rendered severe impacts on all socio-economic aspects across all countries around the world, including within Viet Nam. As a highly open economy which had been deeply integrated into the global economy landscape, Viet Nam experienced significant disruptions due to the devastating Covid-19 outbreaks in key economic regions. The subsequent implementation of stringent social distancing measures to control the pandemic in during the second and third quarter of 2021 resulted in substantial impact on economic and financial activities in our country, as reflected by the surging unemployment and underemployment rates as well as the deprivation of a segment of our workforce.

The National Assembly in Session XV decided to enact a supplementary budget to the original State budget for the fiscal year 20211. This include a supplementary revenue plan of VND 14,754 billion and a supplementary expenditure plan of VND 14,713 billion. Accordingly, the aggregate (revised) state revenue for the fiscal year 2021 was VND 1,358,084 billion; and the aggregate (revised) state budget expenditure for the fiscal year 2021 was VND 1,701,713 billion.

The fight against the pandemic eventually saw a successful outcome thanks to several key factors, including the effective leadership of the Party, the vigilant oversight of the National Assembly, the prompt and decisive guidance of the National Government and/or the Prime Minister, the unwavering dedication of the entire political system, and the concerted efforts of business communities and citizens. In particular, the unprecedented rapid implementation and universal coverage of the upscaled vaccination campaign actually facilitated a transition to the period of safe and effective adaptive living with the pandemic. In such context, our fiscal policy were implimented in a proactive and reassuring manner to timely mitigate the challenges that businesses and citizens affected by the pandemic were facing. Consequently, as the pandemic gradually came under control by the end of the third quarter of 2021, there was a notable resurgence in economic activities, signaling a positive trajectory. A number of socio-economic development objectives, mandates and targets for fiscal year 2021 were finally delivered upon, in which 07 out of 12 key targets were achieved or over-exceeded. The macroeconomic conditions remained stable, with a GDP growth rate of 2.58%, and inflation was kept under control at 1.84% (against the target of 4%). The overall economic framework was well-maintained, and there was an upswing in both export and import values, thriving financial markets, stable monetary conditions, and adequate social protection measures. National defense and security were upheld. Notably, Viet Nam stood out as the only country where all three international credit rating agencies maintained its sovereign credit ratings and upgraded its outlooks to positive. These achievements significantly impacted the state revenue and expenditure outturns in 2021, as particularly set out below:

1. State revenue

The final state revenue outturn for the fiscal year 2021 was VND 1,591,411 billion, increasing by 17.2% (or VND 233,327 billion) from the budget plan, the state revenue ratio was 18.7% of GDP for the same period, while the tax and fee revenue ratio stood alone at 15.1% of GDP. In which:

a) Domestic revenue had the final account settled at VND 1,313,281 billion, which was 15.9% (or VND 179,781 billion) higher than the budget plan. This was mainly attributed to land and housing related revenues, lottery service income and other budgetary revenue. The share of domestic revenue was 82.5% of the total state revenue outturn.

Domestic revenue was over-realised mainly due to the National Government's strong guidance on pandemic control and prevention. The National Assembly and the Government adopted fiscal and monetary policies to stimulate demands and to promote public investment, for example, interest rate reduction, debt forbearance, reduction, exemption and deferment of tax, fee and land rent payment,... which all helped open up capital flows to support the economy, to mitigate challenges for businesses to recover their productive and commercial activities. In addition, several industries and sectors as major contributors to the State budget were not only less impacted by the Covid-19 pandemic but also benefited from the market factors, hence they were able to maintain relatively good growth in their productive and commercial activities. Good examples were the banking sector, securities trading, oil and gas exploration, exploitation and processing, and the vibrant real estate market,... which all contributed to the over-realization of the State budget revenue.

b) Oil revenue had the final account settled at VND 44,638 billion, over-realized 92.4% (or VND 21,438) against the budget plan. This was attributed to the average real oil price of USD 68.8 per barrel, which was USD 23.8 per barrel higher than that in the budget plan. The payable oil output in 2021 was 8.86 million tons, which was 10.3% higher than the plan target.

c) Net trade revenue had the final account settled at VND 216,307 billion, which was 21.2% (or VND 37,807 billion) higher than the budget plan, as the export and import value growth rate out-performed the plan target and the actual outcome in 2020 (the actual trade value growth was 8.3% higher than the plan target for 2021).

The actual value added tax refunding amount was VND 160,798 billion, which was VND 24,298 billion higher than the budget plan. The process of value-added tax refunding was closely monitored to ensure precision in targeting, compliance with legal requirements, and accurate determination of liabilities. This approach aimed to deliver benefits to eligible entities without imposing undue burdens or inconveniences on businesses and taxpayers. Significant strides were made in adopting information technology to facilitate tax refunding operations. The utilization of electronic tax return filing, payment, and refunding, along with the implementation of electronic invoicing, contributed to expanding the tax base. Moreover, efforts were made to strengthen ex post tax audit and inspection procedures, allowing for timely identification and resolution of instances of non-compliance. Such measures were put in place to prevent the unlawful refunding of taxes, ensuring the integrity of the state budget.

d) External grants had the final account settled at VND 17,185 billion, which was 24.9% (or VND 5,699 billion) lower than the budget plan.

Moreover, following up on political guidance of the Party and Resolutions of the National Assembly and the Standing Committee of the National Assembly2, the National Government also reduced, exempted and deferred the payment of tax and other budget revenue obligations, so as to facilitate incorporated businesses, household businesses and citizens to overcome their hardship and recover their productive - commercial activities, which was highly appreciated by the public. Accordingly, the total amount of tax, fee and land rent reduction and exemption was VND 23,982 billion3; the total amount of deferred VAT, CIT, excise and land rent payments was VND 108,426 billion.  

2. State budget expenditure

In the implementation of the National Assembly's Resolution, the National Government required consistent and robust implementation of many State budget expenditure execution actions in 2021 in a stringent and proactive manner. The viewpoint was to set top priorities and to make all efforts on the Covid-19 pandemic prevention and control, to ensure social protection and stable living conditions for citizens. As a result, the final state budget expenditure outturn was set out below:

The state budget expenditure had the final account settled at VND 1,708,088 billion, which was 0.4% (or VND 6,375 billion) higher than the budget plan. Ministries, central agencies, and sub-national governments all strictly complied with the authorised budget plans, at the same time reviewing and cutting back at least 50% of the cost of meetings, domestic and overseas travels, on top of 10% saving of the remaining recurrent expenditure in 2021. Recurrent expenditure items that were deemed unnecessary or delayed were cancelled in an effort to focus resources for the prevention and control of the Covid-19 pandemic.

Below is the high level economic classification of the state budget expenditure final accounts:

a) Recurrent expenditure (incl. expenditure earmarked for future salary reforms) had the final account settled at VND 1,061,316 billion, which was 1.2% (or VND 12,141 billion) than the budget plan.

In 2021, the state budget incurred expenditure of VND 97,903 billion for the pandemic prevention and control efforts as well as relief for citizens affected by the Covid-19 pandemic, in contribution to effective control of the pandemic and delivery of social protection.

The share of recurrent expenditure was 62.97% of the total state budget expenditure outturn. The final account, excluding the budget earmarked for future salary reforms, was 62.4%, which was strictly in line with the guidance stipulated in the National Assembly's Resolution No. 25/2016/QH14, and the Political Politburo's Resolution No. 07-NQ/TW on restructuring of the state budget composition.

b) Development capital expenditure had the final account settled at VND 540,046 billion, which was 12.6% (or VND 60,478 billion) higher than the budget plan.

c) Interest service had the final account settled at VND 101,778 billion, which was 7.5% (or VND 8,287 billion) lower than the budget plan. This is due to the fact that the actual volume of Government bonds issued in 2020 and 2021 was lower than that in the budget plans, corresponding to considerations of the actual state revenue collection and public investment disbursement, while the issuing coupon rates were lower than expected, which lowered the debt interest payments by the central government.

3. State budget deficit

The state budget deficit had the final account settled at VND 214,053 billion, which was VND 129,617 billion lower than that in the budget plan, and was equivalent to 2.52% of actual GDP4, which was much lower than the fiscal deficit target authorised by the National Assembly for the fiscal year (at 4% of GDP according to the plan5). In which, the central government budget deficit was VND 211,650 billion, or VND 107,220 billion lower than the budget plan, the sub-national government budget deficit was VND 2,403 billion, or VND 22,397 billion lower than the budget plan.

4. Total State budget financing and public debt

The total amount of state budget financing as enacted by the National Assembly was VND 608,569 billion; the final account was VND 455,927 billion, which was VND 152,642 billion lower, or equivalent to 74.9% of the budget plan.

Accordingly, the stock of public debt as of end of 2021 was VND 3,616,484 billion, equivalent to 42.65% of GDP, well within the thresholds authorized by the National Assembly./.

*1 Resolution No. 34/2021/QH15, dated November 13, 2021, on enactment of the 2022 State budget plan, and Resolution No 82/2023/QH15, dated January 09, 2023, on revision of the 2022 on-lending plans of sub-national governments, and supplementation to the 2021 recurrent budget sourced from external non-refundable grants, revision of unused budget for operations in 2021 of the General Department of Taxation and the General Department of Customs, carry-over of the budget for prevention and control of the Covid-19 pandemic in 2021.

*2 The National Assembly's Resolution No. 116/2020/QH14, dated June 19, 2020, and the Standing Committee of the National Assembly's Resolutions No. 954/2020/UBTVQH14, dated June 02, 2020, and No. 979/2020/UBTVQH14, dated July 27, 2020.

*3 Of which, the policies promulgated in 2020 also took impacts and reduced the State budget revenue in 2021 by VND 9,374 billion.

*4 The actual GDP in 2021 (the revised one) was VND 8,479.,667 billion.

*5 The planned GDP was VND 8,600,000 billion.

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