Resolution No. 25/2016/QH14 dated November 09, 2016 of the National Assembly on National 5-year financial plan in 2016 – 2020 period

RESOLUTION

On the national five-year financial plan for the 2016-2020 period[1]

THE NATIONAL ASSEMBLY OF
THE SOCIALIST REPUBLIC OF VIETNAM

Pursuant to the Constitution of the Socialist Republic of Vietnam;

Pursuant to Law No. 83/2015/QH13 on the State Budget;

On the basis of considering the Government’s Report No. 453/BC-CP of October 18, 2016, the Finance-Budget Committee’s Verification Report No. 179/BC-UBTCNS14 of October 19, 2016; the National Assembly Standing Committee’s Report No. 48/BC-UBTVQH14 of November 8, 2016, on assimilation of and response to opinions of National Assembly deputies,

RESOLVES:

Article 1. Overall objectives

To further complete the national system of financial institutions and mechanisms; to mobilize, distribute, manage and use financial resources in an efficient manner, satisfying the country’s socio-economic development requirements and objectives; to incrementally restructure the state budget revenues and expenditures; to balance between savings and consumption, thoroughly practice thrift, combat waste, efficiently use public investment funds, make rational investments in humans, properly address social security issues, and ensure national defense and security; to tighten financial rules and discipline along with vigorously stepping up administrative reforms, modernizing and intensifying financial inspection, examination, audit and supervision; to slash and strictly control the state budget deficit and the country’s public and foreign debts, thus ensuring macro-economic stability and national financial security.

Article 2. Specific objectives

1. To strive to obtain a total state budget revenue of about VND 6,864 trillion for 2016-2020, a 1.65 fold increase over the 2011-2015 period; to ensure the proportion of contributions to the state budget will not be lower than 23.5% of GDP, with tax, charges and fees making up 21% of GDP and the average domestic revenue representing 84-85% of the total state budget revenue.

2. To step by step restructure state budget expenditures in a positive manner. The total state budget spending for the 2016-2020 period will be about VND 8,025 trillion, of which development investment expenditure will make up an average of 25-26% and the current expenditure will be reduced to below 64%. Priority will be given to national debt payment and reserve expenditures.

The maximum total development investment expenditure of the state budget in the 2016-2020 period will be around VND 2,000 trillion. Of the figure, expenditure from government bonds will be VND 260 trillion (including VND 60 trillion left from the 2014-2016 period); from overseas capital sources, VND 300 trillion; from the sale of state capital at a number of enterprises, and VND 250 trillion (including VND 10 trillion planned to offset the 2015 central budget revenue deficit but not yet used). To allocate VND 1,800 trillion while earmarking 10% for handling revenue risks and meeting urgent investment requirements during administration. Based on the practical situation, the development investment spending levels will be considered and decided by the National Assembly in annual state budget estimates.

3. The state budget deficit in the 2016-2020 period will be capped at 3.9% of GDP in which the central budget overspending will not exceed 3.7% and local budget overspending, 0.2 %. To strongly cut state budget overspending to no more than 3.5% of GDP by 2020 in order to balance the state budget in a positive manner and keep public debts within permitted limits.

4. To ensure the safety of public debts according to the following targets:

a/ Annual public debts, government debts and foreign debts must not exceed 65%, 54% and 50% of GDP, respectively.

b/ The country’s foreign debt payment will be less than 25% of its total export and service turnover.

c/ The Government’s direct debt payment (excluding on-lending loans) will not exceed 25% of the annual total state budget revenue.

Article 3. Orientations

1. State budget revenue: To further revise and add collection policies, gradually raise the rate of GDP mobilization to the state budget, ensure that the domestic revenue proportion will not be lower than the above prescribed level and will be in line with the country’s development. To ensure rational proportions between direct and indirect taxes; to increase the proportion of domestic revenues; to reduce the proportion of revenues from crude oil, natural resources and imports and exports; to effectively tap revenues from dividends and shared profits from state capital in enterprises. To cut tariffs in line with free trade agreements and international economic integration. To increase measures to prevent tax losses and dramatically reduce tax and state budget revenue debts. To minimize the introduction of policies that reduce state budget revenues.

2. State budget expenditures: To maintain a rational structure between savings and consumption, increase the proportion of development investment expenditure, reduce the proportion of current expenditure and ensure spending on humans, social security and defense and national security. To strive to earmark 20% of the total state budget expenditure for education and training and 2% for science and technology. To implement incentive policies for people with meritorious services to the revolution. To raise basic salary, pensions and allowances for people with meritorious services by an average of about 7% annually. Based on the practical situation, the specific adjustment level will be considered and decided by the National Assembly in the annual state budget estimates.

3. State budget deficit: To dramatically cut state budget deficit to attain the above-mentioned specific targets. To restructure public debts, reduce the proportion of foreign debts and raise the proportion of domestic debts. To develop the bond market, limit the issuance of international bonds and keep the maturity of most government bonds at more than five years and raise the average maturity of government bonds issued in the 2016-2020 period to 6-8 years.

Article 4. Implementation tasks and solutions

1. To step up the completion of the national financial institutions and mechanism to further concretize the Constitution, ensure synchronicity, publicity, transparency and stability and meeting practical requirements of the process of national socio-economic development process and international integration. To restructure state budget revenues and expenditures to realize the set objectives and orientations. To step by step manage the budget according to the outcome-based approach, and make budget statistics in conformity with international practices and standards. To effectively implement solutions to ensure the national financial security and safety; to resolutely reduce the state budget deficit.

2. To implement solutions to adjust collection policies by expanding tax revenues and adjusting the scope of taxation and taxable objects; to review and narrow the scope of tax exemption and reduction; to study the addition of property tax in line with Vietnam’s practical conditions. To restrict to the utmost the incorporation of social policies into tax laws. To scrutinize incentive policies that affect state budget collection.

3. To organize the effective implementation of regulations on renewal of state budget management under the Law on the State Budget. To rearrange expenditures, thoroughly practice thrift, combat waste and increase non-business revenue sources; not to promulgate policies, regimes, programs and projects when funding sources are unavailable; to strictly control advance payment based on budget estimates, transfer of expenditures among different sources and expenditures from the state budget reserves. To implement a tight fiscal policy in coordination with the monetary policy.

4. To seriously observe financial discipline in state budget collection and spending. To enhance inspection, examination and audit to prevent revenue losses and commercial frauds, transfer pricing, tax evasion and fight losses and waste in state budget spending, especially in capital construction investment. To actively urge the payment and settle cases of tax and state budget revenue debts; to minimize tax debts. To strictly and timely handle violations of the law on state budget management, collection and spending, heighten the responsibility of ministerial, sector, local and unit leaders in state budget management. To resolutely cut expenditures already included in the estimates but proving unnecessary or slow in use; to restrict the transfer of expenditures among different sources by December 31 every year in order to strictly control annual overspending and public debts.

5. To drastically and synchronously implement mechanisms and policies on the renewal of financial mechanisms applicable to public non-business units, particularly speeding up the adjustment of public non-business service prices to cover all expenses, thus raising these units’ self-reliance; to work out a roadmap for application of market prices in the education, training and healthcare sectors in combination with giving supports to social policy beneficiaries and poor households; to facilitate the restructuring of state budget spending, earmarking sources for salary reforms while strongly promoting the streamlining of personnel on the state payroll and reorganization of the apparatus.

6. To promote the restructuring and improvement of governance quality and operation efficiency of state enterprises. To study the formation of a specialized body acting as a representative of the state capital owner and manager. To accelerate the divestment of capital from the outside and of state capital from enterprises where the State no longer needs to hold capital or a dominant role under the market mechanism in order to ensure the best interests of the State and people. To review financial management mechanisms applicable to a number of state-owned and stated-invested enterprises in accordance with the Law on Management and Use of State Capital invested in Production and Business Activities in Enterprises and with the tax laws. To efficiently use the proceeds from the sale of state capital at enterprises for development investment.

7. To tightly control public debts within safe limits; to minimize the grant of government guarantee for new loans; to strictly control local administrations’ budget deficit and debts; to arrange sources for full and timely debt payment. To neither use loans for on-lending nor convert government-guaranteed loans into state budget grants. Not to use state budget funds for restructuring state enterprises, handling non-performing loans of the system of state commercial banks, granting charter capital to commercial credit institutions or contributing shares to international financial institutions. New loans will be realized only after their impacts on public debts and medium-term debt payment capacity are fully assessed.

To raise capital from government bonds in a way to ensure the rate of government bonds with a term of five years or longer will make up at least 70% of to-be-issued government bonds to mobilize capital for the budget while extending debt payment terms and managing risks.

8. To further improve the legal systems for the financial market, insurance and accounting and auditing services; to raise the efficiency and effectiveness of exploiting financial sources in the management and use of public property; to intensify and take the initiative in international integration in finance; to improve the legal system on public debt management toward regulating a reasonable scope of public debts in line with international practices and Vietnam’s reality.

9. To continue promoting administrative procedure reforms in finance. To modernize national financial management by accelerating the application of information technology and establishing a national financial database system. To enhance and increase the transparency of finance and budget information under regulations. To reduce processing time for tax- and customs-related administrative procedures.

Article 5. Organization of implementation

1. The Government, ministries, central agencies and local administrations at all levels shall, based on their respective functions and tasks, effectively organize the implementation of this Resolution.

2. The National Assembly Standing Committee, Finance-Budget Committee, Ethnic Council and other committees, National Assembly deputies’ delegations and National Assembly deputies shall supervise the implementation of this Resolution.

3. The Vietnam Fatherland Front Central Committee and the Front’s member organizations, and lawfully established social organizations shall supervise and encourage the people of all strata to implement this Resolution.

This Resolution was passed on November 9, 2016, by the XIV^th National Assembly of the Socialist Republic of Vietnam at its second session.-

Chairwoman of the National Assembly
NGUYEN THI KIM NGAN