|The Government directs to increase revenue collection and review saving expenditure|
|Prepare scenarios to control inflation|
|The public debt by 2025 is expected to be about 43-44% of GDP. Photo: Internet|
Public debt by 2025 is about 43-44% of GDP
According to the Ministry of Finance, in the three years of 2023-2025, the regional and world situation is forecasted to be complicated, especially the Russia-Ukraine conflict has had a great impact on the world economic outlook in the short term. In addition, the turbulent development of Covid-19 variants and the outbreak of inflation led to faster monetary policy adjustments in some major economies.
The domestic market’s investment environment has improved, making Vietnam an attractive destination for foreign investors. As a result, trade activities have been expanded, and exports have maintained positive growth thanks to trade agreements.
However, Vietnam’s economy still faces major risks such as the Russia-Ukraine conflict, geopolitical instability that may increase transportation costs, commodity prices and disruptions of “trade flows” and hold back economic recovery, especially in importing economies.
On the other hand, the internal weaknesses of the economy have not been effectively solved; productivity, quality, efficiency and competitiveness are still low; the recovery is uneven in all sectors, and the accessibility to the digital economy and digital society is still limited.
In that context, the three-year state budget-financial plan for 2023-2025 aims to accelerate the implementation of fiscal policies to support socio-economic recovery and development, restructure the state budget and the public debt, to ensure the key role of the central budget, promote the initiative of ministries and central and local government agencies in association with effectively mobilizing and using financial resources, contributing to control inflation, ensuring major balances of the economy and completing the goals of the National Financial Plan and the 5-year borrowing and repayment of public debt for the 2021-2025 period.
Striving to increase the state budget revenue, use resources to solve social security issues, implement wage reform; maintain the safety and sustainability of national financial resources; tightening budget financial discipline.
The Ministry of Finance’s report shows that the total state revenue for 2023-2025 is expected to increase by 10.3% compared with those for 2020-2022 to VND5,178.4 billion. The average rate of revenue is about 15% of GDP, including the average revenue from taxes and fees of about 12.7%.
Regarding the public expenditure, the total public expenditure for the three-year plan for 2023-2025 is about VND6,473 trillion, 1.15 times higher than those for 2020-2022.
Regarding the budget deficit and public debt, the budget deficit in 2023 is expected at about 4.42% of GDP. The budget deficit for 2024-2025 strives to decrease gradually to maintain the five-year average rate under Financial Plan 2021-2025.
The public debt by 2025 will be about 43-44% of GDP, lower than the ceiling and warning threshold allowed by the National Assembly.
The budget deficit estimate in 2023 is VND455.5 trillion, equivalent to 4.42% of GDP.
The National Financial Plan and the 5-year borrowing and repayment of public debt for the 2021-2025 period issued by the National Assembly show that the average budget deficit rate in the 2021-2025 period is 3.7% of GDP. Of which, the average central budget deficit is 3.4%, and the average local budget deficit is 0.3% of GDP. The plan strives to reduce the rate to less than 3.7%.
Focusing on supporting economic recovery and development
The Ministry of Finance has also proposed solutions to implement the three-year state budget-financial plan for 2023-2025. Accordingly, the short-term solutions focus on implementing analysis and forecast, closely monitoring the market, and promptly advising the competent authorities on flexible and appropriate response scenarios.
Focus on implementing solutions to support socio-economic recovery and development; strengthen the budget and financial management and administration in association with the priorities and goals of the economy; and improve people’s life.
In the medium and long term, it will focus on reviewing and perfecting the financial, legal system, accounting and auditing regimes for entities in the economy; promote decentralization associated with improving responsibility, publicity and transparency.
Accelerating the implementation of solutions to restructure the economy with important components to mobilize and allocate resources effectively.
Perfecting the revenue collection system in line with the country’s socio-economic context and international practices; reviewing inappropriate policies on tax incentives, exemptions and reductions, ensuring fairness, transparency, and encouraging development competition. Minimizing the inclusion of social policies with tax law.
Implementing the management, allocation and use of the financial-budget resources in association with perfecting the mechanism of decentralization, enhancing the responsibilities of ministries, and central and local government agencies.
Following the principle that loans for offsetting the budget deficits can only be used for development investment, and only spend within the economy’s ability and borrow within the repayment ability.
Tightening of financial-budget discipline, public debt, and public asset management will continue to be implemented, strengthening supervision, inspection, and audit; to step up the fight against corruption and wastefulness in the management and use of public finance and public assets.