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

THENATIONAL ASSEMBLY 

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

Pursuant to the Constitution of the Socialist Republic of Vietnam;

Pursuant to the Law on State budgetNo.83/2015/QH13;

Upon the consideration of the Report No. 453/BC-CP dated October 18, 2016; the Inspection report No. 179/BC-UBTCNS14 dated October 19, 2016 by the Finance and Budget Committee; the Report No. 48/BC-UBTVQH14 dated November08, 2016 by the Standing committee of the National Assembly of the Socialist Republic of Vietnam and the National Assembly’s enquiry reports,

RESOLVES:

Article 1. General objectives

Carry onthe completion of national system of financial regulations and mechanisms; mobilize, distribute, manage and use effectively the financialresources,answering tothesocio-economic developmentrequirements and objectives of Vietnam; gradually carry out the restructuring ofthe State budget receipts and expenses; balance theaccumulation with the consumption, practicethoroughlyeconomy and preventextravagance, use effectivelypublic investment, make reasonable investment in human development and the handling ofsocial securityissues, ensuringnational defense and security; tighten the enforcement of financial disciplines and rules in combination with the enhancement ofadministrative reform, modernization and intensification of financial inspection, audit andsupervision; reduce significantly and control tightlythe State budget deficit, public debts andexternal debts, ensure the stability ofmacroeconomics andnational financial security.

Article 2.Specificobjectives

1.Total revenues of the State budget in the 2016-2020 period is VND 6,864 thousand billion, increasing 1.65 times in comparison with that of the 2011-2015; ensure that the rate of revenues to the State budget is not under 23.5% GDP where revenues from taxes, charges and fees account for 21% GDP; domestic revenues account for 84% to 85% of total revenue of the state budget.

2.Gradually conduct the restructuring of the spending of the State budget in a positive direction. Total spending of the state budget in the 2016 - 2020 period is VND 8,025 thousand billion, where the development investment accounts for 25% to 26% of total spending of the state budget;recurrent expensesreduces to under 64% of total spending of the state budget; prioritize the payment of debts and the expenditure on national reserve.

The investment in the development of the state budget in the 2016-2020 period shall not exceed VND 2,000,000 billion. Where the spending contains VND 260,000 billion from theGovernment bondsources (including VND 60,000 billion remaining from the estimate for 2014 - 2016 period), VND 300,000 billion from foreign investments, VND 250,000 billion from the sale of thestate capitalof several enterprises (including VND 10,000 billion estimated for making up for the decrease of revenues of the central government’s budget which has not been used). VND 1,800,000 billion shall be distributed. The remaining amount (10%) of the estimates which has not been distributed shall be used for handling the risks in revenue collection and urgent requirements pertaining to investment in direction. Depending on actual conditions, the distribution for development investment shall be decided in the annual nationalbudget estimates.

3.The rate ofthe State budget deficitof the 2016-2020 period shall not exceed 3.9% GDP, where the deficit of central government’s shall not exceed 3.7% GDP and the deficit of the local government’s budget shall not exceed 0.2% GDP. Reduce as much as possiblethe State budget deficitto not exceeding 3.5% GDP by 2020 to balance the State budget, ensure that public debts are within the limit.

4.Ensure the security of public debts, so that:

a) The annual public debts do not exceed 65% GDP, thegovernment debtsdo not exceed 54% GDP andexternal debtsdo not exceed 50% GDP.

b) The obligation to payexternal debtsis under 25% of totalexport turnover.

c) The Government’s obligation to pay debt directly (excluding the on-lending debts) does not exceed 25% of total annual revenue of the state budget.

Article 3. Orientations

1.Regarding the State budget revenues: policies on revenue collection shall be amended and supplemented to increase the amount of mobilized GDP to the state budget, ensure the amount of domestic revenue not below the abovementioned level,suitable forthe development of Vietnam. Ensure a reasonable ratio between the directly and indirectly collect amount of tax payment; increase the amount of domestic revenues; reduce the amount rate of revenues fromcrude oil, resources, importation and exportation; utilize effectively revenues fromdividends and interests from thestate capitals in enterprises. Reduce the tariff rates according to free-trade agreements or other international agreements who which Vietnam is a signatory.Enhancethe application of measures for fighting against loss of revenues from tax, reduce significantly tax collection andstate budget revenues.Minimize the promulgation of new policies which lead to the decrease of the State budget revenue.

2.Regarding the state budget spending: the structure between theaccumulation and consumption shall be kept acceptably, the spending on development investment shall be increased and therecurrent expensesshall be reduced, the expenses on human,social securityandnational defense and securityshall be ensured. Ensure that 20% of the total spending of the state budget is on education and training and 2% other is onscience and technology. There shall bepreferentialpolicies forpeople meritorious to the revolution.   The base salary, retirement pension and preferential policies for meritorious people shall be increased by about 7% per year in average. Specific increase shall be decided byNational Assemblyin the annual statebudget estimates, depending on the actual conditions.

3.Regardingthe State budget deficit: the rate ofthe State budget deficitshall be reduced significantly so that the abovementioned objectives are fulfilled. Public debts shall be restructured in a way that the external debts are reduced and the domestic debts are increased. Bond market shall be developed, the issuance of international bonds shall be reduced, most ofGovernment bondsshall have duration exceeding 5 years, the average duration ofGovernment bondsissued in the 2016 - 2020 period shall be increased to 6 to 8 years.

Article 4. Tasks and solutions

1. Boostthe completion of national system of financial regulations and mechanisms to continue the detailing of the Constitution, ensure the consistency,transparency, stability and conformity with the requirements arising during thesocio-economic developmentof Vietnam and theinternational integration. Carry out the restructuring of the State budget revenue and spending according to theprovided objectives and orientation. Gradually manage the budget according to the results of the implementation of the tasks; establish statistics of the budget according to the practices and international standards. Implement effectively measures to ensure the security and safety of national finance; reduce as much as possiblethe state budget deficit.

2.Take measures for adjusting collection policies in an orientation towards the expansion of tax bases, adjusting scope and entities; reviewing and limiting the eligibility to tax exemption or reduction; considering the addition of taxes on properties according to the actual conditions of Vietnam. Minimize the combination of social policies in law on taxation. Reviewpreferentialpolicies that have influence on the State budget revenues.

3.Implement effectively regulations on innovation in the management of the state budget according to the Law on State budget, arrange expenditure, practice thoroughly economy, preventextravagance, increase the career revenues; must not promulgate policies, programs or projects if the capital sources are not balanced; tightly control the estimate advances, expenditure forwarding or spending from the state budget provisions. Tight implement fiscal policies in combination withmonetarypolicy.

4.Strictly comply with financial disciplines in the state budget collection and spending. Intensify the inspection and audit to avoid loss of revenue, prevent commercial fraud, price transfer and tax evasion and prevent loss orextravagancein the spending of the State budget, especially on fundamental construction. Activelyexpediteand conduct the handling of tax arrears andState budget revenues; minimize the amount of tax arrears. Strictly and promptly impose penalties for violations against regulations on the management, collection and use of the State budget, increase the responsibility of heads of regulatory bodies and local agencies in the management of the state budget. Reduce spending specified in the estimates, which are unnecessary or implemented slowly; minimize source forwarding to December 31^stof every year to tightly control the deficit and the ceiling public debt of every year.

5.Implement drastically and consistently mechanisms and policies related to the innovation of financial mechanism for public service providers, boost the adjustment of prices of public services towards the sufficient calculation of costs, contributing in the increase of the self-control of units; establish plans on the application of market price in education and healthcare associated with support tobeneficiaries of incentive policies, facilitate the restructuring of the spending of the State budget, make provision to serve the improvement of wages and enhance the downsizing ofpayrolland the restructuring of the organization.

6.Boost the restructuring and improvement of administration quality and the efficiency ofstate-owned enterprises. Consider the establishment of specialized agencies representing the owners and manage thestate capital. Boost thedivestmentof capitals from the outside of the sector andstate capitals atstate-owned enterpriseswhere the governing right is not kept according tomarket mechanism, ensuring the maximization of benefits of the State and people. Review thefinancial managementmechanism for severalstate-owned enterprisesandstate-capitalized enterprisesaccording to provisions of the Law on management and use of thestate capitalin the production and trade at enterprises and laws on taxation. Use efficiently revenues from the sale ofstate capitals at enterprises for development investment.

7.Keep public debts in the acceptable limit; minimize the issuance ofGovernment guaranteesfor new debts; tightly control the deficit and debts owed by local government; allocate capital sources to ensure the sufficient and conformable payment of debts.Must not convert on-lendingloans or government-guaranteed loans into state budget allocation.Must not use the State budget to carry out the restructuring ofstate-owned enterprises, handle bad debts ofstate-owned commercial banks, providecharter capitals for commercialcredit institutionsor contribute to internationalfinancial institutions. New debts shall be owed only when sufficient assessment on the scope of public debt and the medium-termsolvency.

MobilizeGovernment bondsshallensure the rate of publication of Government bonds having term of not less than 5 years at least 70% of total amount of Government bonds to answer to the requests for capital mobilization for the State budgetand concurrently ensure the extension of time limit of thedebt portfolioand the risk management.

8.Complete the legal system for financial market, insurance and accounting and audit services; increasing the effectiveness of financialresourcesin the management and use of public properties; speed up theinternational integrationinfinancial sector; complete the legal system pertaining topublic debt managementtowards reasonable adjustment of the scope of public debtin conformity with international practiceand the actual situation of Vietnam.

9.Enhance the innovation ofadministrative proceduresinfinancial sector. Carry out the modernization of national financemanagementby boosting the application ofinformation technologyand the establishment of national financialdatabasesystem. Enhance and increase thetransparencyof information about finance and budget according to regulations. Reduce the time foradministrative proceduresrelated to taxation and customs.

Article 5.Implementationorganization

1.The Government, Ministries, central government’s agencies and local government’s agencies shall implement this Resolution within their functions and tasks effectively.

2. The Standing committee of the National Assembly, the Finance and Budget Committee, the Council of Ethnic Affairs, committees of the National Assembly, delegations of the National Assembly and deputies of the National Assembly shallsupervisethe implementation of this Resolution.

3.The Central Committee ofVietnamese Fatherland Frontand its members andsocial organizationsestablished according to law shall supervise and encouragepeople from all social stratato implement this Resolution within their responsibilities.

This Resolution has beenpassedin the 2nd Meeting Session of the 14^thNational Assembly dated November09, 2016.

The Chairman of the National Assembly

Nguyen Thi Kim Ngan