For the 2021-2025 period, Vietnam is set to borrow VND3,068 trillion (US$134 billion) to serve socio-economic development targets, with the government being obliged to repay VND1,700 trillion ($74 billion) of direct debts. 

Overview of the National Assembly sitting. Photo: Nhat Bac

The figure was included in a National Assembly (NA)’s resolution on the national financial plan and debt payment for 2021-2025, which has received the endorsement of 100% of deputies present today [July 28].

Meanwhile, the resolution set a ceiling for the public debt at 60% of the GDP, and the Government's debt at 50%.

The Government’s debt repayment obligation should not exceed 25% of total budget revenue, and national foreign debt payment less than 25% of total exports.

Under the resolution, State budget revenue in the five-year period is estimated at VND8,300 trillion ($361.27 billion). With the rate of capital mobilization for the State budget expected at less than 16% of the GDP, the resolution stipulated taxes and fees would stay around 13-14% of the GDP; and domestic revenue of 85-86% of the total.

On contrary, State budget expenditure for the period is set at VND10,260 trillion ($446.5 billion), with capital expenditure making up 28% and regular spending at 62-63%. Of the total VND2,870 trillion ($125 billion) set aside for development, funds from foreign sources would be VND300 trillion ($13 billion), while another VND248 trillion ($10.8 billion) could be raised from privatization and divestment of State capital in State-owned enterprises.

This affects a State budget deficit of 3.7% of the GDP, in which the rate at the central government of 3.4% of the GDP, and provinces at 0.3%.

The NA requested the Government to continue perfecting taxation policies for sustainable income sources and tax base expansion while putting on greater efforts in addressing tax arrears and losses.

Looking forward, the NA’s resolution called for restructuring of budget spending by raising proportion in capital expenditure and gradually cutting regular spending.

“Allocating State budget in this regard should be result-oriented,” stated the resolution, noting priorities are given to social welfare, environment, national defense, security, education, science, and technology.

Allocating $125 billion for public investment

On the same day, the NA ratified a resolution on mid-term public investment in the 2021-2025 period with a total capital of VND2,870 trillion ($125 billion).

The priority is to focus on three projects of national priority, including the Long Thanh International Airport, the Eastern North-South expressway Phase 1, and the Ham Thuan Nam reservoir, for a combined value of VND65.8 trillion ($2.84 billion).

The resolution stressed the urgency of enhancing efficiency in the management of State capital, which in turn is serving as the attraction for investment sources from the private sector.

“There should be a breakthrough in infrastructure development to boost growth and ensure social welfare,” stated the resolution.

In this regard, the NA expected the budget would be used on national projects with high spillover effects for socio-economic development and competitiveness. 

According to the resolution, a balanced approach in investment strategy among regions and sectors is key, especially for highland, coastal, mountainous areas prone to natural disasters and diseases or backward development levels, ethnic minority groups, and climate change issues.

Among measures to address slow progress in the disbursement of public capital and subsequent project implementation process, the Government expected to focus on no more than 5,000 projects in the 2021-2025 period, less than half of the previous five years.

In this regard, the Government borrowed VND345 trillion ($15 billion) to cover the deficit and debt principal.

The NA requested the Government to make public the 2019 final accounts in accordance with the law, along with greater financial discipline in budget management.

“A close control of budget deficit and public debt is essential for national financial security, along with fighting waste and corruption,” noted the resolution.

Drawing lessons from the 2019 budget management, the NA pointed out a high level of regular spending at 65.2%, exceeding the original target of 64%.

This would require consistent measures from the State apparatus in tightening spending and further giving priority for capital expenditure, added the resolution.