Budget deficit of 63,630 billion VND due to... "overspending"

Explaining at the National Assembly meeting on November 2, Finance Minister Dinh Tien Dung said that the budget revenue shortfall in 2013 was VND63,630 billion compared to the estimate. Thus, this is the first year that Vietnam has failed to complete the budget revenue estimate, forcing it to propose increasing the deficit from 4.8% to 5.3% to compensate.

"Overspending"

That is the metaphor of National Assembly delegate Tran Du Lich (HCMC) when talking about budget deficit. He commented that the situation of "overspending" has caused the budget revenue to not be enough to cover expenditure, always falling into the situation of "patchwork".

According to delegate Tran Du Lich, among the five causes leading to budget deficit, there are two positive causes. These are investment efforts to accelerate the process of building technical infrastructure for industrialization and implementing social policies, reducing the gap between rich and poor, rural and urban areas, etc.

The remaining three negative causes include: Maintaining the budget allocation system based on asking and giving for too long; "overspending" in spending and the bloated state apparatus; not strictly enforcing discipline in the budget; and the problem of loss in basic construction.

Leading to 1 of these 3 negative causes - according to delegate Lich - is that at every level of the industry, "too many seats are created, no budget can bear it"!

Agreeing with the above comment, the opinion of National Assembly delegate Danh Ut (Kien Giang) cited more specific evidence about the expansion of the state apparatus.

He said that currently, there is no ministry that only has 4 deputy ministers as stipulated in Decision 36 of the Government, but in reality, there are from 5 to 7 deputy ministers (some ministries have up to 9 deputy ministers).

Such a cumbersome apparatus will lead to inefficient work, and the salary budget will increase. "The government needs to urgently implement salary allocation according to job positions, both to save costs for the apparatus and to create conditions for salary reform" - delegate Danh Ut suggested.

Increase the deficit to 5.3%

Finance Minister Dinh Tien Dung gave three reasons for the budget deficit to justify the need to increase the deficit ceiling to 5.3%.

According to Minister Dung, the main reason for the revenue shortfall is that the 2013 budget estimate is higher than the actual capacity. The domestic revenue estimate from land and import-export revenue in 2013 both increased by approximately 20% compared to the actual capacity in 2012 - a level that is too high compared to the economic capacity.

The second reason is that in 2013, policies on tax exemption, reduction and deferral had to be implemented to remove difficulties for businesses, which also led to a decrease in state budget revenue. And the remaining reason is that growth was lower than expected, along with ineffective management and operation, so some subjects took advantage of it, cheated and evaded taxes.

Regarding the state budget estimate and central budget allocation plan for 2014, the majority of National Assembly deputies agreed to continue maintaining the budget deficit at 5.3% and the principles for building the estimate and allocating the central budget for 2014.

However, delegates also suggested that the Government should tighten discipline in state budget spending; consider issuing new policies that cause budget spending to increase while not being balanced...

Delegate Danh Ut (Kien Giang) agreed to raise the deficit to 5.3% but suggested that the Government should implement the principle of deciding on the expenditure structure based on the revenue structure. If there is a revenue deficit, expenditure must be reduced, because if spending continues as it is now, public debt will increase and will not be reduced by 2015 as the Government has proposed.

National Assembly delegate Cao Si Kiem (Thai Binh) said that to ensure the goal of economic stability and recovery by the end of 2015, it is necessary to increase the budget deficit. According to Mr. Kiem, the Government proposed to increase the budget deficit in 2013, including 2014, to 5.3% and issue an additional VND170,000 billion in government bonds for three years (2014 - 2016), then in the next 4 years, VND400,000 billion must be mobilized.

“Although it is very high, there is no other way but to accept it. We know that accepting these numbers will make it very difficult to implement the roadmap to reduce budget deficit for the following years,” said Mr. Cao Si Kiem.

National Assembly delegate Le Nam (Thanh Hoa) said that in the very short term, a large amount of money will be spent. We must calculate carefully to solve priority goals according to the bond issuance roadmap, while also immediately solving the concerns of the people and the country.

According to Laodong