In the last week, during discussion on State revenue collection and expenditure estimates for 2016 and the following years, many representatives of the National Assembly expressed their concern about that fact that economic growth targets may not be reached, causing difficulties to revenue collection. In case the Ministry of Finance reaches the revenue collection estimate, it should strictly control expenditure, reduce regular expenses and reinforce financial discipline for balancing the State budget.
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Reduction of revenue collection, so decrease in expenditure
According to the Government’s report, the total State revenue collected in 2016 increased by 2.4% (24,500 billion dong) compared to the estimate. Of this, domestic collection rose by 5.6% in comparison with the estimate. The amount collected from crude oil is estimated to be 72.5%. The amount collected from exports and imports decreased by 2.9% compared to the estimate. There are various negative factors impacting on revenue collection and expenditures in 2016 such as falling oil prices, economic growth lower than expected, natural disasters, epidemic diseases, dissolved enterprises, bankruptcy, import and export turn-over growth unable to meet the objectives. Therefore, many representatives of the National Assembly highly appreciated the Government’s estimate of reaching and even attaining beyond the target of revenue collection.
Expressing concern about the figures, based on detailed data and findings from supervisions in several provinces, the National Assembly’s Finance and Budget Committee produced a clarification report, showing numerous difficulties and challenges in achieving the estimate by the Government.
In the middle of the year 2016, at the preliminary summary meeting of the Finance sector, Mr. Vuong Dinh Hue, Deputy Prime Minister requested the sector to grasp thoroughly the principle of “raising revenue collection for increasing expenses when estimating and managing the Budget”. He also asked the provinces which could not reach the targets this year, to reduce expenditures for next year. “Do not let provincial budget disbursement go to excess and then ask the Headquarters for support” Straightforward words may make the provinces displeased at this moment, but these are the Government’s guidelines for re-controlling expenditures, ensuring rules and regulations of the State budget management.
With regard to the estimate implementation in 2016, Minister of Finance, Mr. Dinh Tien Dung (representative from Ninh Binh) shared it was necessary to get the provinces involved in coordinating with the Finance sector. The Finance sector would further strictly control rules and discipline in terms of finance, expenses and avoid expenditures in excess and public debts to rapidly increase.
Revenue collection should be estimated on the basis of growth targets
Listening to the Government’s report, many representatives of the National Assembly felt unconcerned about the revenue collection estimate in 2016. However, the question of the State budget should be solved in line with economic growth in the following years. In addition, regular expenditures should be reduced; public expenses need to be controlled and the State budget regulations shall be complied, which draw the National Assembly representatives’ attention.
The two key targets in terms of GDP and export have not been achieved, leading to troubles in balancing the Budget. Exchanging on this issue, several representatives shared their common understanding about the Finance sector’s difficulties in ensuring estimated revenue collection against the background of failure to attain the two targets. In this context, the Finance Sector has strived to reach the revenue collection targets, showing their great effort. Nevertheless, representatives raised their concern about the following year (2017) with highly estimated GDP growth of 6.7%. Other opinions supposed that growth scenarios should be developed on the basis of different milestones so that revenue collection and disbursement could be conducted in an active and appropriate manner.
According to Mr. Vu Tien Loc from Thai Binh, economy restructuring and shifting in the context of integration should be taken into account when we forecast revenue collection and expenditure in the coming time. He expressed his concern that the target of 6.7% of GDP growth might not be achieved. “Expenditures should match with the estimated GDP at the rates from 6.3% - 6.5% and then budget collection and expenditure could be calculated in a reasonable way. The calculation should be firstly done from the lowest level, then expenditures could be raised if the economy grows” said Mr. Vu Tien Loc.
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Vice chairman of the National Assembly, Mr. Phung Quoc Hien said that revenue was the measurement of economic growth. Thus, the identifying of revenue to be collected should be based on economic growth forecasts. He also expressed his concern about reducing proportions of tax and fee mobilization by period. The rate was 27% of the GDP in the past period meanwhile in 2011 – 2015 the rate fell to 20 – 21% of GDP, resulting in excessive expenditure.
The year 2017 is the first year of the budget stabilization period 2017 – 2020 and implementation of the Law on the State Budget 2015 so the development of the State budget estimate is very significant. The world and domestic situations are creating plenty of challenges. In this context, for developing the State Budget estimate in 2017 in line with the reality and in a sustainable manner, the National Assembly’s Finance and Budget Committee supposed “the target of above 6.7% of GDP is rather high, leading to risks in forecasting State revenue collection and expenditure indicators”. Therefore, the Committee suggested that the Government should propose 2 options to the National Assembly: The growth rate of 6.5% and 6.7%; if not, the Government should adjust its direction methods and then propose the National Assembly to revise the targets upon 6 months of implementation for ensuring more stable macro-balance.
By Minh Anh / Phuong Lien
Minh Anh / Phuong Lien