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| Dr. Le Duy Binh, Managing Director of Economyca Vietnam |
In the context of the Covid-19 pandemic, which caused many difficulties for the economy, how do you evaluate the role of the Ministry of Finance in managing revenue collection and expenditure in 2021?
In the first half of 2021, we witnessed that the revenue collection and expenditure situation still progressed smoothly, however, after the Covid-19 pandemic broke out again at the end of April 2021, we faced many difficulties in production and business, leading to difficulties in revenue collection, especially after the pandemic caused negative impacts on key economic development areas.
Enterprises, business households, and those who were able to pay taxes were negatively affected, posing a great impact on the State revenue collection. Therefore, the pressure on the budget revenue in 2021 was huge. On the other hand, the need for spending on pandemic prevention and control was also very high, especially for direct activities in the fight against the pandemic as well as support packages for those facing difficulties.
In that context, it could be seen that the Ministry of Finance, as an advisory body, implementing fiscal policies and budget-finance, has been flexible in operating to ensure revenue collection and expenditure in 2021. Up to this point, it was still within the capacity of the economy as well as the state budget. In particular, figures like Government budget balance, support for pandemic prevention and control, fiscal policies to support businesses and people facing difficulty were still meeting basic requirements.
To help the economy overcome difficulties caused by the pandemic, the Ministry of Finance has advised the Government on fiscal policies to support people and businesses. Could you tell us your assessment of these solutions from the beginning of the year to now?
The needs of people and businesses were very great, especially for businesses that have been exhausted due to the impact of the pandemic.
However, our resources were limited, so the response as I mentioned above might not be as desired. In the context of the reduction in budget revenue, reserve resources were limited because this was the second year we had been affected by the Covid-19 pandemic, it could be seen that the Ministry of Finance had managed to ensure resources for basic operation of the economy as well as meeting the needs due to the impact of the Covid-19 pandemic which was a huge effort.
Many ideas stated that stronger fiscal policies with larger-scale support packages were needed to recover the economy, I thought this required calculations from different angles and could not be done immediately, because it depended on the absorptive capacity of enterprises. Basically, at present, we still ensured the need for the budget, which was very important.
Support packages to stimulate the economy were necessary, but it was not a prerequisite. It was necessary to discuss and clarify the objectives, disbursement methods, projects, beneficiaries and expected outcomes for the business, beneficiaries and the economy, and its potential impact on the economy with macroeconomic stability before discussing the size of the stimulus or support packages.
Therefore, I thought that, in the current context, there could be many other activities that could support people and businesses, as well as solutions to solve current difficulties for businesses, solutions to restore or protect business rights, the right to circulate goods of enterprises, this would help enterprises as well as the economy promote internal resources to create added values, generate money to recover production, business and the economy.
Regarding difficulties and obstacles for enterprises, many ministries and sectors, including the Ministry of Finance, established a special working group to support enterprises, this was very important. In the financial sector, businesses also faced difficulties in the field of tax finalization, cargo clearance, fulfillment of tax obligations. If those difficulties could be removed for businesses this year, we do not forget the important task of improving the business environment. In particular, for the Ministry of Finance, if the role of the Special Task Force was performed well, it would have a very positive impact on thousands of businesses and millions of business households in the current context.
The prevention of the Covid-19 pandemic is expected to be set aside by the National Assembly for discussion at this session. What do you think about the efforts of the Government and the Finance sector in Government Budget Balance for pandemic prevention and control?
As I mentioned above, to balance the budget for regular national activities as well as to allocate resources for pandemic prevention and control needed the great efforts of the Government and the financial sector. Anyone working in the Finance sector will know that the Finance industry must also comply with financial disciplines with strict regulations to follow.
Budget spending must ensure the principle of prudence, however, the Finance sector had also made great efforts to find revenue sources for pandemic prevention and control. For example, the Ministry of Finance had managed to save recurrent expenses, thereby allocating a resource of more than VND14.6 trillion from the savings of recurrent expenditures in 2021 to supplement the central reserve budget for pandemic prevention. In addition, the Ministry of Finance guided localities to use different sources for local pandemic prevention.
Could you please tell us your assessment of the Ministry of Finance’s efforts and results in public debt management?
Vietnam’s public debt had improved and been restructured towards a safe and sustainable direction because the Ministry of Finance had advised the Government on public debt management. As a result, Vietnam’s public debt was still under the ceiling. In recent years, the public debt ratio has decreased sharply from 63.7% of GDP at the end of 2016 to about 55.2% of GDP at the end of 2020. This had helped us to have space and room to run the economy and ensure macroeconomic stability. This was thanks to the great contribution of the Ministry of Finance in the role of advising the Government.
In the context of the Covid-19 pandemic, recently, there had been a number of proposals on the calculation to raise the public debt ceiling, accept more debt to have resources to support and restore the economy as well as pandemic prevention. We were facing pressure that was whether it was necessary to loosen the public debt ceiling or not.
My point was to be cautious. Because when we had to borrow debt, we must determine the effective use of that debt source. If we did not use it effectively, we would leave a huge debt burden for the economy in the future. Currently, we still have room for not raising the public debt ceiling. However, if it was necessary to continue to increase debt, we must also clearly determine whether we would borrow from domestic or foreign sources. We must carefully calculate the efficiency of the use of capital. We must ensure the most important factor that is macroeconomic stability.
Thank you!