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| Dr. Le Duy Binh, Managing Director of Economyca Vietnam |
Amid the current difficulties due to the outbreak of Covid-19, how do you evaluate the role of the Ministry of Finance in managing the budget revenue and expenditure in 2021?
In contrast to the positiveness in the budget revenue and expenditure in the first half of 2021, after the fourth outbreak of the Covid-19 pandemic at the end of April 2021, production and business have faced a lot of challenges, especially in budget revenue.
As a matter of fact, the Covid-19 pandemic has caused a negative impact on key economic development areas. Enterprises, business households, and those who are able to pay taxes are negatively affected which impacts the State’s budget revenue. Therefore, the pressure on the budget revenue in 2021 is huge. Furthermore, the need for spending on pandemic prevention and control over the past year is also very large, especially for direct activities in anti-pandemic work as well as support packages for those facing difficulties.
However, in the role of an advisory body, implementing fiscal policies and operating the budget-finance, the Ministry of Finance has been flexible in operating to ensure budget revenue and expenditure in 2021. So far, the situation is still within the capacity of the economy as well as the state budget. In particular, figures such as the need for state budget, support for pandemic prevention and control, fiscal policies to support pandemic-hit businesses and people are still under control.
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. How do you evaluate such solutions?
The number of pandemic-hit people and businesses in need of support is very high. However, the limitation of our resources cannot allow us to satisfy all above requirements.
In the context of the decrease in budget revenue, the limited reserve resources due to the constant outbreak of the Covid-19 pandemic, the Ministry of Finance has made huge efforts to ensure resources for the basic operation of the economy as well as meet the resources arising from the impact of the Covid-19 pandemic.
Many people think that stronger fiscal policies with larger-scale support packages are needed to restore the economy, however, this requires calculations from different angles and cannot be done immediately, because it depends on the absorptive capacity of enterprises. Basically, at present, we still ensure the need for the budget, which is very important.
Support packages to stimulate the economy are essential, but not a prerequisite. Instead, it is necessary to discuss and clarify the objectives, disbursement methods, projects, beneficiaries and expected outcomes for the business and beneficiaries as well as its potential impact on macroeconomic stability rather than the size of the stimulus or support packages.
Therefore, in my view, in the current context, there can be many other activities that can support people and businesses to solve current difficulties such as those to restore or protect business rights, the right to circulate goods of enterprises. This will enable enterprises as well as the economy to promote internal resources to create added value, money sources for the recovery of production, business and the economy.
Regarding difficulties and obstacles for enterprises, many ministries and branches, including the Ministry of Finance, have established a special working group to support enterprises. In the financial sector, besides obstacles in the field of tax finalization, customs clearance of goods, fulfillment of tax obligations, it is necessary to fulfill the task of improving the business environment. Especially, for the Ministry of Finance, if the Special Task Force performs well, it will positively impact thousands of businesses and millions of business households in the current context.
The prevention of the Covid-19 pandemic is expected to be set by the National Assembly for discussion at this session. What do you think about the efforts of the Government and the Finance sector in needing to balance the budget for prevention and control?
As I mentioned above, in the context of this year’s budget, the government and the financial sector have put huge efforts in order to balance the budget for regular national activities as well as to allocate resources for pandemic prevention and control.
The Finance industry must also comply with financial discipline with strict regulations especially in following the principle of prudence in spending. However, the Finance sector has also made great efforts to find revenue sources for pandemic prevention and control. For example, the Ministry of Finance has managed to save recurrent expenses, thereby allocated 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 guides localities to use different sources for local pandemic prevention and control.
Could you please tell us your assessment of the Ministry of Finance’s efforts and results in public debt management?
Vietnam’s public debt has been limited and restructured towards a safe and sustainable direction thanks to the effective work of the Ministry of Finance on public debt management. As a result, our public debt is 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, which enables us to have space and room to run the macro economy stably. This is a great contribution of the Ministry of Finance in the role of advising the Government.
In the context of the Covid-19 pandemic, recently, there have been a number of proposals on the calculation to raise the public debt ceiling, accept more debt to have resources to support and recover the economy as well as the pandemic prevention work.
We are facing pressure as to whether it is necessary to loosen the public debt ceiling. My point is to be cautious. Because when we have to borrow debt, we must determine the effective use of that debt source. Otherwise, we will leave a huge debt burden for the economy in the future. Currently, there is enough room in order not to raise the public debt ceiling. However, the key point is to clearly determine whether to borrow from domestic or foreign sources and at the same time we must carefully calculate the efficiency of the use of capital, which must ensure the most important objective, is macroeconomic stability.
Thank you very much!