March 31, 2020 19:35

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State Treasury: Step by step breaking the reform of state budget management

09:15 | 21/02/2020

VCN - Capital budget management is one of the main tasks of the State Treasury system, so it is always focused on the direction of safer state treasury management, more efficiency and towards good international practices.

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In the first year, the State Treasury had a surplus and contributed VND5,000 billion to the budget thanks to the budget management. Photo: ThuyLinh.

Saving trillions of VND

According to the State Treasury, in the early stages of establishment, the management of funds was implemented in a decentralized model, leading to ensuring the spending needs of the state budget and passive transaction units. Therefore, along with the construction and implementation of centralized electronic payment systems, up to now, the management of funds has been transformed in the direction of centralized and unified management throughout the system. Since then, it has ensured the initiative in fully and promptly meeting the spending needs of the budget at all levels.

A major step forward in the management of funds is that in 2019, the State Treasury actively advised and reported to the Ministry of Finance to complete the institution on state ownership management in accordance with international practices. Accordingly, the State Treasury submitted to the Ministry of Finance to promulgate Circular No. 64/2019/TT-BTC, and select the commercial banks to deposit temporarily idle state treasury management. The new quota regulation in Circular 64/2019/TT-BTC optimizes the idle state treasury management source temporarily, increasing the efficiency of the use of State Treasury funds.

In addition, to complete the centralized payment account model according to international practices and to the recommendations on the payment account model of the International Monetary Fund (IMF) and the World Bank, the State Treasury advised the Ministry of Finance for promulgation of Circular No. 58/2019/TT-BTC providing regulations on management and use of State Treasury accounts opened at the State Bank of Vietnam and commercial banks. The State Treasury shall transfer all balances of payment at the end of the day at commercial banks to the only account opened at the State Bank. This is a reform step of the finance sector in the management of state franchise in a safe and effective manner. Through that, the State Treasury advised the Ministry of Finance to coordinate with the State Bank in implementing monetary policies, controlling the money supply of the economy, managing interest rates and exchange rates in line with monetary policy.

The State Treasury has implemented the operation of using the State Treasury to advance to the Central and provincial budgets in order to deal with temporary deficiencies, make up for the deficit and repay the due principal within the scope of the estimate. The annual state budget has been decided by the National Assembly and assigned by the Prime Minister; thereby, support the central budget to ensure balance, save costs, funds management and debt management; support localities to accelerate investment in important socio-economic infrastructure projects in the locality.

The term deposit of the State Treasury at commercial banks has added the State Treasury's professional revenue of VND5,104.6 billion (about VND3,081 billion higher than the maintenance of demand deposits with an interest rate of 1% per year). According to Deputy General Director of the State Treasury Nguyen QuangVinh, the above-mentioned reforms in the past year have been breakthroughs, supporting fiscal and monetary policies. Not only that, the reforms have saved the central and local budgets trillions of dong.

"This is the first year the State Treasury has a surplus and remits to the state budget of VND 5,000 billion," said Deputy General Director Nguyen QuangVinh.

Develop a transparent and modern fund management process

In 2020, the State Treasury will study and complete the legal basis in order to create a solid framework for state management of state-owned operations in a safer, more effective manner and towards good international practices such ascircular regulating the advance of the State budget (stipulating the advance of the State Budget to cover the temporary shortage of the Central and provincial budget funds; for the Central budget, the provincial budget borrowings to make up for the deficit, to repay the principal as proposed by the State Audit and in line with the spirit of the Law on Public Debt Management). The circular prescribes the time-limit repurchase of Government bonds (stipulating the use of temporarily idle state budget to repurchase the Government bonds with a definite term via bidding).

The State Treasury will also coordinate to participate in amending and completing a number of relevant mechanisms and policies such as: the State Bank's interest rate policy paid to the State Treasury; regulations on the use of the State Treasury's deposits at commercial banks, etc., thereby creating a basis and foundation for closer coordination with the State Bank, meeting the common macro-economic goals.

According to the leaders of the State Treasury, it will build and deploy the professional processes on the state franchise in an increasingly transparent, clear and electronic manner. Specifically, implementing advanced tools to adjust the state franchise, according to international practices; continue to improve the quality of cash flow forecasts; carrying out risk management operations for state management of state-owned enterprises in accordance with international practices. At the same time, it will expand the State Treasury's collection accounts network to create favorable conditions for taxpayers and enhance non-cash payments according to the Government's policy.

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The State Treasury also set out the research and development to form a synchronous budget management application program, connecting with the relevant application programs; researching and implementing a concentrated electronic bilateral payment model with commercial banks, in collaboration with the State Bank of Vietnam to implement inter-bank electronic payment in foreign currencies.

By ThuyLinh/ HuuTuc