VCN - In order to manage the budget both safely and effectively, the State Treasury will continually innovate its management in accordance with a legal frameworks that meets international standards.
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The budget management of the State Treasury has had positive results, timely serving the payment of agencies and units. According to the State Treasury, the reform of budget management of the State Treasury has been implemented for more than two years, complying with the 2015 State Budget Law and Government Decree No. 24/2016/ ND-CP.
For example, in the past, the budget management focused on ensuring enough money to meet the spending needs of the budget, but now, the budget management is aimed at a safe and effective manner.
At the same time, the focus of this budget also creates resources to use state funds more effectively by using idle funds such as making advances to the central and provincial budget, term deposit of the state budget at commercial banks which operate safely and stably according to the State Bank’s ranking, in accordance with international practices.
"The use of idle funds has created capital to support localities to accelerate the implementation of important infrastructure investment projects, and create circulating capital for economic development,” said the State Treasury.
Notably, when the state budget was surplus and disbursement of public investment was slow, the State Treasury actively reported to the Ministry of Finance to reduce the amount of capital mobilization in the market, instead using advances of State funds for the central budget to offset overspending. In 2018, 45,500 billion VND of idle funds from the state budget was used for the central budget for short-term loans as prescribed to reduce the issuance of government bonds, saving about 1,600 billion VND of interest payable in 2019 for the central budget.
In addition, the budget management of the State Treasury has actively supported the State Bank in the implementation of monetary policy due to demand deposits of the State Treasury’s account at the State Bank (accounting for nearly 95% of total demand deposits). This source of funding has helped the State Bank to simultaneously implement two goals of buying foreign currencies to supplement the State's foreign exchange reserves and stabilizing market liquidity, not affecting inflation, maintaining lending interest rates to support economic growth and reducing costs for the Bank State in regulating monetary policy.
In order to ensure safe and efficient budget management, the State Treasury will continue to develop and perfect the legal framework for budget management (the decree regulates budget management and guiding circulars). Of which, the responsibilities, authorities and mechanisms for close coordination between the Ministry of Finance and the State Bank and agencies are clearly defined in managing budgets and treasury accounts, and in forecasting cash flows and creating a legal basis for budget investment activities.
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At the same time, the State Treasury will also build and develop a risk management and control system. In particular, the classification clearly identifies the objects and areas of high risk that need to be strictly managed in the management of the budget, from there choosing safe policies and solutions or efficient, less risky fund investments. In addition, the State Treasury will continue to build and implement a modern centralized payment system based on the foundation of the TABMIS system in order to manage the budget in the most effective way, improving the effectiveness of Government’s financial management.
By Thuy Linh/Kieu Oanh