Minister of Finance Ho Duc Phoc. Photo: quochoi.vn

Flexibly managing fiscal policy

The fiscal policy has been managed flexibly. The State budget task in 2021 achieved the target. The state revenue exceeds the estimate, the state expenditure follows the estimate and the budget deficit is controlled at 4% of GDP.

The Government has issued a series of fiscal policies to support businesses and residents as well as prevent the Covid-19 pandemic worth VND200,000 billion.

The Government’s Decree 52/2021 has extended and reduced taxes for businesses worth VND115,000 billion. Decree 92/2021 has reduced taxes worth VND21,300 billion. The Covid-19 vaccine fund has raised nearly VND9,000 billion.

Some deputies said that the space for public debt is still large and the budget deficit needs to increase. The Minister affirmed that the space is not significant. The Government’s total loan for 2016-2021 is VND1,852,000 billion, the loan for 2021-2025 is expected at VND3,068,000 billion, 1.7 times higher than in the previous period.

The public debt in 2025 is 1.6 times higher than in 2020. The public debt by 2025 is estimated at 45.6% of GDP. If calculating as per the former GDP, the debt is at 57.9%, exceeding 55%.

The Government‘s debt for 2021-2025 is 41.8%. If calculated according to the former GDP, the debt is 53.1%, exceeding 45%.

The Ministry of Finance is advising the Government on the stimulus package through reduction of interest rate support of about VDN20,000 billion per year. If the package is applied for five years, VND1 trillion will be channeled into the economy, creating jobs, boosting the economy, creating revenue for the budget, and reducing budget deficit for the next period, the Minister said.

Increasing domestic revenue but unable to revise up estimate of crude oil revenue

It is said that this year is so difficult, how to increase revenue?

For example, the revenue rose to VND7,200 billion from revenues arising in 2020 such as tax arrears from Formosa's contractor, fines from the difference in gas price in product consumption of VND2,457 billion, other revenues of VND2,500 billion and unexpected revenue of VND2,997 billion from land rent by the US Embassy.

Regarding the increase in revenue from crude oil, the Ministry said that the estimate cannot be revised up. Because the actual output from 2016-2020 decreased by an average of 1.45 million tons/year, equal to 11%. Existing mining output is naturally falling due to dry oil wells, high geological and technical risks. Therefore, it is difficult to increase output.

Regarding tax on fertilizer, the National Assembly Standing Committee has assigned the Ministry of Finance to develop the tax rate on fertilizer together with the law on taxation. The tax rate on fertilizer is now 0%, so domestic enterprises are suffering losses because they are not refunded input tax. Thus, the Ministry of Finance is proposing raising the value-added tax on fertilizer to 5%.

Regarding the active management of the Central budget, the Minister of Finance said the Politburo has assigned the Government to develop a project on decentralization of budget management, increasing the leading management of the Central budget and the active management of the local budget and amend the State Budget Law in the near future.