The Government did not achieve its budget revenue collection target in January-September, while the country’s public debt burden was getting heavier, according to the National Assembly's (NA’s) Finance and Budget Committee’s report on the State budget performance this year and plans for next year, delivered at the NA’s sixth sitting on October 22.

High budget revenue collection targets

A view of Ca Mau Gas-Power-Fertilizer Complex. The Government plans to increase tax on nitrogenous fertilizer in 2019

According to the Finance and Budget Committee, the Government had set unachievable targets for revenue from domestic production and business activities compared with last year, leading to the lower-than-expected revenue from local enterprises.

Although the State budget revenue this year may surpass the estimate as the amount in the nine-month period accounted for 73% of the plan, some targets were missed. In particular, the proportion of the revenue from taxes and fees hit 20.7%, below the target of 21%.

In addition, tax debts remained large and are likely to increase. According to a report by the Government, as of last month, domestic firms’ tax debts had amounted to VND82.9 trillion (US$3.6 billion), up 13.4% against late last year.

The tax collections from State-owned, foreign direct investment and private enterprises were VND4.9 trillion, VND33.6 trillion and VND4.9 trillion, respectively, within the nine-month period, dropping 2.9%, 15.1% and 2.2%, respectively, over the year-ago period.

According to the State Audit of Vietnam (SAV), 25 out of 57 provinces failed to meet their budget revenue collection targets. Of these, HCMC, Hanoi and Vinh Phuc had been on the list for two consecutive years.

Next year, tax and fee revenue is forecast to make up less than 21% of the country’s gross domestic product, hindering the State budget performance.

The NA’s Finance and Budget Committee suggested clarifying the reasons for the problem and presenting solutions to raise the State budget revenue in the coming time.

Also, the committee proposed the Government set suitable targets in the years to come.

SAV, in a report commenting on the State budget performance this year, which was sent to the NA, said that the revenues, which exceeded the estimates, were mainly from land use fees and crude oil exports. Of these, property taxes and fees increased 35.9% to VND38.7 trillion, while revenue from crude oil exports totaled VND19.1 trillion, surging by 53.2%.

However, land use fee collections were volatile. Meanwhile, the crude oil price used to calculate the estimates (US$50 per barrel) was lower than the market price of US$75 per barrel, and the output surged by 450,000 tons.

Public debt increase

Despite the decline in the public debt-to-GDP ratio, longer lending terms, lower lending rates and the larger proportion of domestic loans, public debts may increase to VND3.400 quadrillion from VND3.100 quadrillion last year. Of which, the Government debt may hit VND2.900 quadrillion this year, well above the VND2.600 quadrillion recorded last year.

In addition, some agreements have been clinched, and when the capital for these projects is disbursed, the public debt will increase further.

According to the NA’s Finance and Budget Committee, the public debt-to-GDP ratio has fallen in recent years, recorded at 62.2% last year, an estimated 61.4% this year and 61.3% next year.

On the other hand, the Government debt may account for 52.1% ofGDP this year and 52.2% next year from the ratio of 51.8% last year.

The committee agreed with the Government’s target that the State budget deficit would account for 3.6% of GDP next year, a year-on-year increase of 0.1%, but proposed cutting the capital allocated for those failing to meet their budget revenue collection targets in line with the Law on the State Budget. 

Meanwhile, the nation’s foreign debt-to-GDP ratio nearly reached the threshold of 50%.

Although the public debt is within its threshold, the stakes are high.

SGT