Mr. DinhTien Dung, Member of the Politburo, Minister of Finance: Financial foundation and resources are getting better

Tue, 23 Feb 2021 13:57:00  |  Print  |  Email   Share:

In the early days of the Lunar New Year 2021, Mr. Dinh Tien Dung, Politburo member and Minister of Finance, spoke with Customs News about achievements in the past five years.

Mr. DinhTien Dung - Member of Politburo, Minister of Finance.

From "running the budget like walking on aline" to having "enough to spare"

Five years ago, when reporting at the discussion session on the 2016-2020 5-year Financial Plan of the National Assembly Standing Committee on March 7, 2016, the leader was very frank and decisive: “For years now, operating the budget has been like walking on a string. This year continues to go online. With this situation dragging into 2017, if the rope breaks, we will die.”

Looking back at that time, crude oil prices fell sharply, threatening to take away nearly VND20-30 trillion of budget revenue each year. The public debt growth rate is about three times higher than the economic growth rate.

By the end of 2015, government debt reached 50.3% of GDP, exceeding the ceiling of the National Assembly by 0.3%. The balance of the state budget is difficult; the rate of investment spending continued to decline from 28.8% in the previous period to 23.6% in 2011-2015 (calculated according to the provisions of the State Budget Law in 2002).

This shows that in the first year of the term, there were many difficulties. From the end of 2015, the Government submitted to the National Assembly a 2016 budget estimate with an oil price of US$60/barrel. But right after Congress decided the estimate, oil prices fell continuously.

Falling oil prices will affectmoney directly into the central budget, which is also the difficulty that hangs over the financial industry. Not only oil prices, in 2016, economic growth was lower than forecast; natural disasters, storms, floods and environmental pollution occurred in some central provinces, which significantly affected the implementation of the budget revenue estimate, especially the central budget revenue.

Prime Minister Nguyen XuanPhuc with delegates attending the
Conference on implementing tasks in 2021 of the Finance sector.

It is so difficult, but the head of the Finance sectorhas never faltered in the face of difficulties!

Minister DinhTien Dung said: “At that time, there was a risk of budget imbalance. Of course, we couldn’tjust wait. As soon as the National Assembly finalized the general cost estimates, the Ministry of Finance asked to immediately assign the cost estimates to the units in the system, implementing comprehensive solutions. On that basis, the Tax Departments and Customs Departments have advised the party committees and local authorities on solutions to fulfill the task of State budget collection and strive to increase revenue.”

As a result, the final settlement of budget revenue in 2016 reached VND1,107,381 billion, 9.2% higher than the estimate. Finalization of budget revenue in 2017 reached VND1,293,627 billion, 6.7% higher than the estimate. Finalized budget revenue in 2018 reached VND1,431,662 billion, exceeding 8.5% of the estimate. And the total state budget revenue in 2019 was also high, exceeding 9.9% compared to the estimate.

Fight with "thorns" in 2020 and a beautiful ending

The socio-economic results, including the results of the State budget-finance tasks from the beginning of the term, have been quite stable, helping our country enter 2020 with many expectations. However, 2020 wasa tough year.

From the beginning of 2020, the Covid-19 pandemic struck, causing the world economy to plunge. For Vietnam, there werealso many more impacts from complicated developments in the East Sea, trade competition between major countries, natural disasters and floods.

At the end of the implementation of the social distancing measures (April 2020), Vietnam entered a "new normal" period while simultaneously implementing the "dual" goal, both fighting the pandemic and focusing on economic growth.

State budget deficit increased sharply due to spending on disease prevention and support for people facing difficulties caused by the Covid-19 pandemic; spending on disaster recovery, production restoration and essential infrastructure.The revenue decreased due to production and business delays due to the Covid-19 pandemic. Even in October, the Ministry of Finance submitted to the Government to report to the National Assembly to reduce budget revenue by about VND190 trillion and proposed to increase the deficit to ensure sources for investment and domestic demand stimulus.

However, thanks to the drastic direction of the Party, the Government and the Prime Minister, especially the close direction of the head of the Finance sector, the efforts of cadres, civil servants, public employees and workers of the industry and businesses, ending 2020 is a picture with impressive highlights: economic growth at 2.91%, rare positive growth compared to other countries in the region and around the world; State budget revenue reached about VND1,507.1 trillion, equaling 98% (a deficit of VND31.9 trillion) compared to the estimate, an increase of VND184 trillion compared to the figurereported to the National Assembly previously; overspending is estimated at VND248.5 trillion (up VND14 trillion compared to the estimate), corresponding to less than 4% of GDP estimated to be made within the scope of the National Assembly's permission to adjust (about 4.99-5.59% of GDP).

“What do these important results mean for the past 5-year term, Sir?”

By the last day of 2020, Minister DinhTien Dung,said: “Thanks to the fiscal space accumulated over the four years in 2016-2019 due to the restructuring of the state budget, safe management of public debt in the spirit of Resolution 07 of the Politburo and Resolution 25 of the National Assembly on the 5-year State Budget Plan for 2016-2020, thanks to the efforts to complete the highest revenue estimate possible by 2020, we still meet the spending requirement for important tasks, including urgent tasks arising from natural disasters, the pandemic, national defense and security, and ensuring sources for development investment according to the 2020 estimate. This can be considered a bright spot of State budget finance in 2016-2020.”

The phrase "guarantee the expenditure requirement" said by the minister at this time seems light but actually contains a "burden". Facing the Covid-19 pandemic, the Finance sector, with its functions and duties, is always drastic in implementing the instructions of the Government and the Prime Minister when implementing fiscal solutions to remove difficulties for production and business, support people and businesses.

More than 20 fees and charges have been reduced, with some brought to zero. The Ministry of Finance has submitted to the Government to report to the National Assembly and the Standing Committee of the National Assembly to pass a resolution on continued exemption of agricultural land use tax by the end of 2025; a resolution on adjusting to increase the family allowances of taxpayers and dependents to reduce tax liability for individuals; a resolution on reducing corporate income tax payable by 2020 for businesses, cooperatives, non-business units and other organizations.

By the end of 2020, the total value of the fiscal support package will reach VND123.6 trillion. Along with that is about VND18.1 trillion for pandemic prevention and control and support for nearly 13 million people.

Not only revenue, expenditure management is also a great success. In the budget period for 2016-2020, Minister DinhTien Dung repeatedly mentioned the correct and successful advice on the management mechanism. According to him, in the context of high public debt at the beginning of the term and high pressure, in 2016, the Ministry of Finance submitted to the Government to submit to the Politburo to issue Resolution No. 07-NQ/TU on guidelines and solutions on restructuring the state budget, manage public debt to ensure a safe and sustainable national financial system.

In 2017, the Ministry continues to submit to the Government to submit to the National Assembly for approval the Law on Public Debt Management (amended) with new and stricter regulations. In addition, the whole industry always tries its best to closely monitor the budget deficit level and the plan to reduce overspending.

Minister DinhTien Dung said: “In 2017, for the first time in 10 years, Vietnam managed the budget deficit in both absolute and relative numbers. During the National Assembly sessions at that time, many National Assembly deputies called this a miracle when the deficit in 2017 was VND136,962 billion, equal to 2.74% of the realized GDP, a decrease of VND41,338 billion compared to the estimate. Following that, in 2018, the state budget deficit was VND153,110 billion, equal to 2.8% of realized GDP, a decrease of VND50,890 billion compared to the estimate. In 2019, too, the state budget deficit was VND209,500 billion, equal to 3.4% of GDP. In 2020, despite many difficulties, the deficit is still strictly controlled, estimated at VND248,500 billion (an increase of VND14,000 billion compared to the estimate), equivalent to less than 4% of the estimated GDP, still within the National Assembly. Allow for adjustment (about 4.99-5.59% of GDP).”

Good control of the state budget deficit has contributed to controlling public debt, decreasing from 63.7% of GDP at the end of 2016 to 61.4% of GDP in 2017; 61% of GDP in 2018; 55% in 2019 and 55.8% in 2020.

And most of all, with the spirit of increasing spending on development investment as an important driving force, although revenue is difficult and recurrent expenditures do not have much room for saving, the leaders of the Finance sector are still determined to direct efforts to increase spending for investment.

On the basis of Resolution No. 07-NQ/TU, the Ministry of Finance has focused on restructuring in the direction of increasing the proportion of spending on development investment and reducing recurrent expenditures. In fact, investment spending has increased from 25.7% of total state budget expenditure in 2017 to over 26.9% in 2020, the actual average rate of realization in 2016-2020 will reach over 28% (target for 2016-2020 is 25-26%). Correspondingly, the proportion of recurrent expenditure decreased from 64.9% in 2015 to 64% in 2020, the average actual rate of realization in 2016-2020 will reach about 63%, while still adjusting to increase average wages. 7% annual army, along with implementing multi-dimensional poverty reduction policies, social security, security and defense.

Commenting on the last year of his term, the Minister said: "A year of hardships, but I am very proud."

The achievement of the year 2020 has set a round result for the Finance sector to complete all the set targets on finance - State budget for the 2016-2020period.

Minister of Finance DinhTien Dung visited and gave gifts to workers
in difficult circumstances at Van Loi Garment Co., Ltd.
(NinhBinh), January 19, 2020.

Lessons from outstanding efforts

Looking back on the past 5 years, Minister of Finance DinhTien Dung saidthat his efforts to cope with difficulties from time to time has brought him and the industry many valuable lessons.

“From the oil prices in 2016, we have identified more clearly the importance of analysis and forecasting. We have to do well in forecasting to come up with a response plan. That way, we can actively turn difficulties into advantages. Since then, the collection progress has been updated more frequently in addition to having a firm grasp on economic developments, markets and prices, to organize the assessment of the impact on state budget revenues, properly assessing the situation and forecast closely the collection capacity monthly, quarterly and for the whole year.

Regarding operating the budget, we are more aware of the importance of the coordination between the Ministry of Finance and local authorities as well as with relevant ministries and agencies. This is being done stricter "than ever before".

During business trips, speakingwith local leaders about the budget collection task, I always ask the two sides to cooperate. The ministry is a vertical branch, managing the organization, personnel and expertise, but the leadership role of the Party in the locality is very important. The unit that completes the task is the province or city. Completion of provinces and cities also means completion of ministries and branches. If you agree, the difficulty will be overcome.”

Minister DinhTien Dung alsohighlighted that the fundamental and long-term solution to increase budget revenue is still to stimulate economic growth through reform of administrative procedures, solving difficulties for businesses, creating conditions for enterprises to expand and develop production and business.

Tax offices and customs offices should speed up the modernization of tax management, declaration and payment. To date, 100% of public services of the Finance industry have been posted on the National Public Service Portal. In the future, the tax and customs offices will continue to reform and modernize through upgrading the procedures system to better serve people and businesses, contributing to publicity and transparency, combat loss and waste.

In particular, the year 2021 is a pivotal year of a new development period for the Finance sector in general and the General Department of Customs in particular, so the General Department of Customs needs to focus resources to successfully implement the project on redesigning the Customs IT system in association with building a smart customs model.

“These solutions have had and will have a multifaceted impact, contributing to reducing operating costs for businesses, improving competitiveness and also creating equality and favorable conditions for businesses to access resources and business opportunities. If the business operates well, the economy develops well, the budget revenue will also be good,”the Minister said.

Especially, as an advisory unit to the Government to introduce policies to reduce recurrent expenditures, the main lesson is to "set an example".

The best evidence for this role model is rearranging the apparatus, downsizing the payroll in the spirit of the Central Resolution. With the spirit of drastic participation, units under the Ministry of Finance such as the General Department of Taxation, the General Department of Customs, and the State Treasury have effectively deployed the arrangement and organization of the apparatus.

The Ministry of Finance has arranged and cut over 5,641 focal points of units from the central level to the team level in the locality; reducing 4,544 leadership and management positions; reduced nine public non-business units (from 36 units to 27 units). In 2019, the payroll of civil servants at administrative organizations of the Ministry of Finance has decreased for 4,974 targets, equivalent to 6.7% compared with the number of plans assigned in 2015 of 74,262 payrolls. By 2020, it has decreased by 8.7% compared to the assigned target in 2015, ensuring the roadmap to 2021, the administrative payroll will decrease by 10% compared to 2015. Only the tax system, after arrangement, in three years, the level of contracting savings isnearly VND5,000 billion.

In addition to the results achieved, the Minister also pointed out the shortcomings of the sector such as: financial discipline - State budget, although there are changes, is still limited; the management of the collection and use of the budget and public property sometimes does not meet the standards, norms and regimes; the restructuring of state-owned enterprises was slow, affecting the state budget balance; Public investment has yet to fulfill the plan and is still wasteful.

The foundation for a more successful new era

Assessing the past journey, Minister DinhTien Dung said: “General Secretary and President Nguyen PhuTrong once said, never before has our country had the fortune, potential, and international position and prestige that it does today. In my opinion, one of the things that shows the potential of the country is the budget, not enough revenue before, not enough to eat, while up to now the financial potential has increased. When the financial foundation is getting better and better, contributing to macroeconomic stability, bringing Vietnam's position, prestige and credibility in the international arena to a new height.”

The achievements in the 2016-2020 term are an important premise for the whole country to confidently enter 2021 – the first year of the 5-year plan and the 10-year strategy for socio-economic development.

A reporter fromCustoms News asked the Minister: “In the context that the world economy continues to depend heavily on the ability to control the Covid-19 pandemic, there are still many difficulties ahead, the great goals and also the challenge is that economic growth must reach 6%, State budget revenue increases 3% compared to the estimate of the National Assembly. So what solutions doesthe Finance sector need?"

Minister DinhTien Dung said: "With the determination to continue to consistently implement the 'dual' goal of both controlling the pandemic well and recovering economic growth, maximizing the results achieved in 2020 and sustainable fundamentals, I believe that the whole country will continue to achieve the socio-economic and state budget targets set out.”

The Minister noted the tasks that the Finance sector needs to focus on in the future.

Firstly, the Ministry of Finance will continue to review and report to the Government and competent authorities on solutions to remove difficulties for businesses, and attract investment capital transfer sources in accordance with the objectives and requirements of economic development, striving for economic growth at a level higher than the plan, about 6.8%. However, according to the leadership of the Ministry of Finance, the proposal of policies must be based on the practical situation, ensuring the focus.

Along with the recovery of the economy, Minister DinhTien Dung said that the role of the party committees and local authorities is very important. Local authorities need to pay attention to direct the budget work, ensure correct, sufficient and timely collection of arising revenues; combat loss of revenue, transfer pricing, tax evasion, smuggling, commercial fraud, origin fraud; assign the target of reducing tax arrears to below 5%; strive to increase the minimum state budget revenue by 3% compared with the central estimate.

Another point to note is to thoroughly grasp the spirit of maximizing savings for meetings, holidays, per diem, and limit the purchase of cars and expensive equipment.

For agencies and units that are applying a specific mechanism, at least 15% reduction compared to the 2020 estimate; to step up the arrangement and renewal of the public non-business sector, reduce at least 5% of the state budget support for partially-funded non-business units; no recurrent expenditure support is provided for units that have full cost autonomy.

In 2021, the reorganization and equitization of SOEs, and the restructuring of the banking sector should also be strengthened in parallel with the definitive handling of unprofitable investment projects, improving the operational efficiency of the whole system.

The Minister said: “The budget revenue estimate for 2021 includes VND40 trillion of equitization and divestment of the central budget. Therefore, concerned ministries and agencies need to urgently and drastically implement the equitization and divestment roadmap at the beginning of the year, avoiding accumulation at the end of the year as in recent years.”

Finally, on the basis of the document of the XIII Party Congress, the Ministry of Finance will finalize the National Financial Plan Report for the 2021-2025 period, build a system of regular spending allocations for 2022; to develop a budget decentralization scheme to report to the Government, serving as a basis for the management and administration of state budget-finance in the future, in line with socio-economic development objectives and tasks.

Resolution of the XIII Congress, including important tasks to continue promoting restructuring of the state budget, increasing investment and development spending, implementing salary reform, social insurance policy reform, standard adjustment poor; strictly manage public debt safety; national debt; improve the efficiency of state budget use, thrift, prevent corruption and waste.

The lunar New Year has arrived, we clearly feel the joy of the chief in leading the Finance sector to successfully complete the tasks in 2020 and the 5-year term of 2016-2020. We also understand the concerns of the head of the Finance industry when there are still many challenges to overcome in the near future.

Saying goodbye to us, the Minister wants through Customs News to send his greetings to the officers, civil servants, officials and employees of the Customs sector in particular and more than 66,000 officials and employees of the Finance sector a new year with health, happiness and successful completion of the goals of the 2021 plan.

By: Hong Van/ HuuTuc/Customsnews



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