The Ministry of Finance said it would tighten spending next year as well as the financial planning for the next five years as state budget revenues have been lower than estimated.

Vo Thanh Hung, chief of the Budget Department under Ministry of Finance

Vo Thanh Hung, chief of the Budget Department under Ministry of Finance, made the pledge after submitting the financial statements for the state budgets during 2016-2020 period and estimations for 2017.

State budget revenue has been increasingly constrained over the past year because revenue mostly comes from crude oil, trade and inland revenue, however, the incomes from these sources are dropping.

Output and the price of crude oil have been on the decline while the majority of the income from trade activities are VAT and excise taxes. Revenues from import-export activities in the last three months of the year would need to reach USD3.4bn to meet the goal for this sector.

Vo Thanh Hung said balancing the state budget had been a difficult task, but 2017 would be especially tough. In 2009, state budget overspending, excluding payments of principals, stood at 3.7% of GDP, according to the Ministry of Finance.

"The public debt to GDP ratio should not exceed 65% and budget overspending mustn't be over than 4% of GDP. Spending must not get any higher," he said.

He went on to say that improving the business environment was the long-term solution. Revenues from taxes would increase along with the number of enterprises.

"There are about 500,000 to 600,000 firms and we hope this could increase to one or two million. The Ministry of Finance will revise the current policies and expand the taxpaying base. It's also time to apply property tax," he said.

In addition, the ministry will try to limit the amount of tax arrears to less than 5% of the budget revenue. The current tax arrears are high following the economic downturn in 2008-2011. Debts that cannot be recovered will be written off.

About USD45m could be cut from the expenditure for the sectors including health and education. When basic wages were increased in July, localities weren't given more funding and instead were told to raise money from other sources.

Only the Ministry of Finance has cut its budget for state-owned cars. Next year, the ministry will stop providing funds to buy cars for deputy ministers and below.

Dtinews