With a view to making a financial disclosure of the state budget, the Ministry of Finance (MoF) has publicised its report on Vietnam’s budget situation estimates for 2023. This shows some caution in formulating budget estimations amid lingering difficulties at home and abroad.
The report features an overall picture on the state budget in this year, with estimated revenue of more than 1.62 quadrillion VND (70.46 billion USD), which is up by 0.4% compared to the realised figure estimated for 2022.
Of which, it will be over 1.334 quadrillion VND (58 billion USD) from domestic revenue; and 42 trillion VND (1.83 billion USD) from crude oil exports – based on estimations that the domestically exploited output will be nearly eight million tonnes with an average price of around 70 USD per barrel; 239 trillion VND (10.39 billion USD) from export and import activities; and 5.5 trillion VND (239.1 million USD) from foreign assistance.
It is also predicted that total central budget revenue will be about 863.5 trillion VND (37.52 billion USD) this year, while total local budget revenue will stand at 757.2 trillion VND (32.92 billion USD).
Meanwhile, it has been estimated that Vietnam’s total state budget spending will be more than 2.076 quadrillion VND (90.26 billion USD) – up 16.3% compared to the 2022 expenditure estimations.
Of the figure, spending for development investment will account for 726.7 trillion VND (31.6 billion USD), and recurrent expenditures will be more than 1.172 trillion VND (50.96 billion USD). Other expenditures will also include debt service (102.9 trillion VND or 4.47 billion USD); spending for salary reforms, retired salaries, and adjustments of some schemes of subsidies, allowances, and social security pertaining to basic salaries (12.5 trillion VND or 543.47 million USD); and other sums of spending (61.8 trillion VND or 2.68 billion USD).
According to the MoF, the state budget overspending in 2023 will likely sit at 455.5 trillion VND (19.8 billion USD), which will be equivalent to 4.42% of GDP. The central budget deficit will reach 430.5 trillion VND (more than 18.7 billion USD) or 4.18% of GDP; and local budget overspending will touch about 25 trillion VND (over 1.08 billion USD) or 0.24% of GDP.
Solutions
In order to make the budget landscape this year possible, the government will carry out a series of solutions.
Specifically, “the government will focus on administering appropriate and effective fiscal policies, promptly responding to complicated fluctuations of domestic and foreign situations, ensuring the objectives of maintaining macroeconomic stability, controlling inflation, promoting growth, and ensuring major balances of the economy,” said MoF Minister Ho Duc Phoc.
“In addition, we will continue to perfect the state budget collection system, strengthen revenue management, and restructure revenue sources so as to ensure sustainability. We will also have to study, amend, supplement, and perfect the tax administration institution to ensure the accurate, sufficient and timely collection of taxes, fees, charges and other revenue into the state budget,” Minister Phoc said. “We will also tighten financial discipline, strengthen the responsibility of the head of all units in the management and use of finance and budget. We will also administer state budget expenditures closely, thriftily and efficiently, while cutting expenses that are not really necessary. We will also have to thoroughly save regular expenses.”
In this year, the government will also thoroughly direct the practice of thrift and fight against waste; strengthen inspection, examination, and handling of responsibilities of organisations and individuals in the observance of regulations on thrift practice and the fight against waste, while ensuring the effective use of the state budget.
“The government will also strictly control the state budget deficit, the local budget overspending, and the debt level of the local budget. It will also continue strengthening the inspection and inspection of the borrowing and use of loan capital and debt repayment. In addition, the government will also actively implement solutions to restructure public debt in accordance with the Law on Public Debt Management,” Minister Phoc stressed.
Positive landscape
In 2022, the country’s state budget picture enjoyed a big surplus, with enterprises in general gradually riding out the storms to continue growing. Specifically, the total state budget fetched a surplus of 9.67 billion USD.
Total budget expenditure is estimated to be more than 67.93 billion USD – tantamount to 87.5% of the year’s estimations and up 8.1% year on year.
The budget expenditures ensured demands for socio-economic development, national defence and security, state management, payment of debts that were due, support for people attacked by the health crisis, and restoration of production activities in sectors hit by natural disasters and COVID-19, according to a government report on the issue released two months ago.
Meanwhile, the state budget revenue was estimated to reach as much as 77.6 billion USD, equivalent to 126.4% of the year’s estimations and up 13.8% year on year. All types of revenues registered a year-on-year expansion, mirroring recovery in almost all sectors in the domestic economy.
Domestic revenue stood firmly at 61.8 billion USD, which was equal to 120.8% of the year’s estimations and up 9% year on year.
What is more, revenues from export-import activities last year sat at 12.17 billion USD, equivalent to 140.7% of the year’s estimations and up 29.7% compared to the same period last year.
According to the MoF, it has been calculated that last year, the government might have loans worth total 29.3 billion USD. This consisted of loans for central budget balance of 28.1 billion USD, of which borrowing to offset the central budget deficit might be a maximum of 19.6 billion USD, borrowing to repay the principal might not exceed 8.52 billion USD, and on-lending might be 1.16 billion USD.
Such loans were reported to come from government bond issuance instruments, with the average issuance term being likely less than nine years; from official development assistance loans and foreign preferential loans; and from other lawful financial sources or from issuance of government bonds directly to the State Bank of Vietnam.
Also, according to the MoF, the government’s debt repayment last year is estimated to have stayed at around 14.6 billion USD. Of which, the government’s direct debt payment was a maximum of 13 billion USD and the repayment of on-lending projects sat at 1.56 billion USD.
As for the loan and repayment plan of localities, borrowing from the government’s foreign loans and other domestic loans was reported to stay at about 1.24 billion USD. Localities’ debt repayment was worth 265.7 billion USD, including principal payment of 158.1 million USD and interest payment of 107.56 million USD.
It has also been estimated that Vietnam’s public debt at the end of 2022 might stood at 43-44% of GDP; the government debt might be 40-41% of GDP; and the nation’s foreign debts might stand at 40-41%.
Meanwhile, the government’s direct debt repayment obligation for 2023 will be as much as 18-19% of total state budget revenue – lower than the NA’s permissible limit of 25%. Also in this year, the public debt for this year will hover at around over 40 per cent of GDP, meaning the national financial safety will still be maintained as it was last year.
