The current state budget allocation, where regular expenditures account for 70%, coupled with debt repayment rates projected to reach 70% over the next decade, raises a crucial question: where will we find the funds for development investment to ensure national prosperity?

A massive bureaucracy

General Secretary To Lam has sent a clear message about the urgent need for state apparatus reform as regular expenditures now consume up to 70% of the budget. During a National Assembly’s group discussion on October 31 regarding the draft resolution on urban government organization in Hai Phong City and the proposal to establish Hue City as a centrally managed city, he expressed great concern.

“If the bureaucracy is not streamlined, development will stall,” the General Secretary noted. He explained that approximately 70% of the budget is spent on regular expenditures, leaving no funds for development investment.

He compared this to other countries that allocate only 40% of their budgets to regular expenses, dedicating over 50% to investment, defense, and security.

“Why can’t we raise salaries? Because increasing salaries while maintaining a massive administrative apparatus would consume 80-90% of the budget. This leaves no room for other critical activities,” he stated.

As a result, the General Secretary emphasized the necessity of streamlining the apparatus, reducing the number of public servants, and cutting regular expenditures to free up resources for development.

Last week, at another discussion on socio-economic conditions, Minister of Home Affairs Pham Thi Thanh Tra remarked that no other country in the world has as many provincial, district, and commune-level administrative units as Vietnam. Additionally, no other country allocates as much of its budget to organizational and personnel expenses, leaving little for investment.

On October 30, Nguyen Huu Dong, Deputy Head of the Central Internal Affairs Committee, pointed out during a meeting that regular expenditures account for 70% of the budget. The Central Steering Committee for Anti-Corruption and Waste noted that reducing this figure to 50% is necessary to redirect funds towards public projects that benefit the people.

The consistent calls from the General Secretary and responsible officials highlight the urgency of the situation and the pressure for reform.

Despite the projected 10% increase in state revenue for 2024, the Government has formally recommended to the National Assembly not to raise pensions, public employee salaries, or social al -lowances in 2025. This reflects the enduring budget strain, with 75% dedicated to regular expenses, 25% to debt repayment, and development investment reliant on perpetual borrowing.

A person, a family, or a nation cannot develop - let alone achieve sustainable growth - on such a fragile financial foundation.

The roots of the issue

First, it must be acknowledged that the personnel reduction program has been successful in numerical terms. From 2014 to mid-2022, the workforce was cut by 64,869 people, meeting Party resolution targets.

However, the Ministry of Home Affairs admitted that past reductions mainly involved retirees and voluntary resignations, leading to the departure of skilled individuals who transitioned to the private sector. This did not necessarily align with performance evaluations.

A World Bank report indicated that Vietnam’s ratio of public employees per 1,000 residents is significantly higher than that of many countries: 43 employees (excluding military and police), compared to 13 in the Philippines, 16 in India, 17 in Indonesia, and 25 in Singapore.

Vietnam has 22 ministries and equivalent agencies, while Japan has only 11, Singapore has 15, and China has 20. The number is also higher than most EU countries.

This issue has persisted for years. In a 2014 National Assembly session, then-Chairman Nguyen Sinh Hung warned that if regular expenditures consumed 72% of the budget, how could investment in development be funded and budget deficits reduced?

The burden of redundancy

In his speech, the General Secretary proposed solutions while pinpointing the core issue.

He noted that many ministries and agencies have unclear mandates, overlapping responsibilities, and fail to delegate authority to localities, fostering a culture of dependency. A single issue can involve multiple ministries, making accountability ambiguous. For example, sand, gravel, and stone extraction involves five to six ministries, but none clearly take the lead.

“The Ministry of Transport, the Ministry of Natural Resources and Environment, and the Ministry of Construction all claim responsibility, but when asked who is ultimately accountable, no one knows,” he said.

“With such a cumbersome apparatus, how can we endure it? Local governments are similar, with overlapping departments handling the same issues. Why is such duplication and complexity necessary? This consumes immense time. Businesses suffer, needing approval from multiple authorities for simple matters, leading to delays and corruption,” he added.

An expansive, overlapping state structure imposes additional regulatory conditions that limit citizens’ and enterprises’ rights. The proliferation of these “sub-licenses” makes their removal as difficult as “chasing after scattered chickens.”

According to recent government data, the number of business regulations has surged to nearly 16,000 since the Enterprise Law was enacted, creating significant barriers for entrepreneurship.

The goal of having one million businesses by 2020 was missed, and the target of 1.5 million by 2025 seems unattainable, with only 930,000 currently active.

Streamlining regulations should be part of administrative reform, clarifying the roles, functions, and authority of government bodies and distinguishing between state and market roles.

Vietnam plans to implement numerous large infrastructure projects, notably the North-South high-speed railway. By 2037, direct debt obligations will account for 68-69% of state revenue, comparable to today’s budget for regular expenditures.

Without immediate reform, Vietnam will face challenges in repaying debt, funding regular expenses, and running the government, which will impede development. Directly addressing these issues, as highlighted by the General Secretary, can lead to effective solutions.

Tu Giang - Lan Anh