Directive No. 19/CT-TTg on the development plan for economic and social progress and state budget estimate for 2007

 DIRECTIVE

On the development plan for socio-economic development

and state budget estimate for 2007

To implement the Resolution of the 10th National Party Congress on the direction and tasks of the five-year socio-economic development plan from 2006 to 2010 with the important goal of accelerating economic growth, enhancing efficiency and sustainability of development, and quickly bringing the country out of underdevelopment, the Government has submitted to the National Assembly for approval the five-year socio-economic development plan from 2006 to 2010.

The Prime Minister requests all Ministries, sectors, localities, Economic Groups, and State-owned Corporations to thoroughly grasp the Resolution of the 10th National Party Congress and the five-year plan from 2006 to 2010, continue to innovate in all aspects, from economic reform thinking to the content and methods of plan construction; exploit maximum potential and advantages, promote economic development; in the short term, focus on implementing the socio-economic development plan and state budget estimate for 2007 with the following main requirements and contents:

A. OBJECTIVES AND MAIN TASKS OF THE 2007 PLAN

I. Objectives and Tasks

The year 2007 is the second year of implementing the direction and tasks of the five-year socio-economic development plan from 2006 to 2010, a year of great importance, continuing to create momentum for completing the goals of the five-year plan from 2006 to 2010 and achieving high effectiveness in international economic integration.

The Prime Minister requests all Ministries, central agencies, and localities to focus on effectively implementing the following main objectives and tasks:

1. Strive to achieve an economic growth rate (GDP) above 8%. Continue to accelerate the restructuring of the economy and labor structure towards increasing the proportion of services and industry; strive to increase the added value of agriculture, forestry, and fisheries by more than 3.2% (production value increases by more than 4.3%), the added value of the construction industry by more than 10% (industrial production value increases by more than 15%); trade balance of exports and imports increases by more than 16%; create conditions for the economy to develop rapidly and sustainably in 2007 and continue to grow rapidly in subsequent years.

Create a favorable environment and conditions to reduce costs and improve the quality of service activities. Improve the quality of domestic trade activities, particularly focusing on developing distribution networks under conditions of integration. Rectify and reorganize the real estate market.

Link the implementation of the Law on Prevention and Combating Corruption and the Law on Thrift and Anti-Waste with the rectification of investment management and construction work. Reorganize project management boards; gradually end the closed nature of investment and construction; strengthen supervision and inspection to effectively prevent corruption and waste, ensuring the quality of projects. Create conditions for the economy to develop stably and sustainably while achieving higher economic growth rates than in 2006.

2. Promote socialization in social fields, creating conditions to encourage private sector investment in these areas.

Reform state management, expand autonomy and self-responsibility for cultural, health, education, and sports public institutions; bring about clear changes in education and training development; gradually improve the quality of social services. Continue to effectively implement the Comprehensive Strategy for Growth, Poverty Reduction, and Millennium Development Goals.

Implement policies to promote new job creation, develop vocational training systems, and improve the quality of human resources with a reasonable structure.

Effectively address pressing social issues, especially crime, drug abuse, traffic accidents; control population growth rates.

3. Reduce environmental pollution, mitigate and improve environmental quality, fundamentally resolve environmental degradation in industrial zones, densely populated residential areas; rehabilitate and treat polluted rivers, lakes, ponds, canals, and ditches.

Strengthen the ability to forecast adverse natural and weather changes. Enhance capacity to prevent and limit the negative impacts of natural disasters and unfavorable climate changes on the environment; promptly rescue and mitigate consequences caused by natural disasters.

Use natural resources and the environment in river basins rationally, efficiently, and sustainably, ensuring ecological balance, conservation of nature, and preservation of biodiversity. Strengthen propaganda, education, training, and capacity building to raise awareness about the environment; consider protecting and preserving the environment as the responsibility of the entire society.

4. Vigorously reform and perfect administrative systems, enhance the morality and capability of the cadre and civil servant corps, and reform public finance. Effectively implement policies and measures to prevent and combat corruption and waste; consolidate the trust of the people and businesses in the state management apparatus.

5. Strengthen national defense and security consolidation, maintain national independence, social order, and safety, especially in key areas, border regions, and islands; create a stable political environment for economic development and international integration.

II. Tasks for Building the State Budget Estimate for 2007

All Ministries, sectors, localities, Economic Groups, and State-owned Corporations shall organize the construction of the state budget estimate for 2007 in accordance with the provisions of the State Budget Law, Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law and related legal documents, paying attention to the following contents:

1. The state budget revenue estimate for 2007 must be constructed according to policy and regulations in a positive direction, ensuring encouragement of production and business development, market development, and implementation of international tax commitments; at the same time, effective and reasonable measures must be taken to strengthen revenue management, prevent tax evasion and fraud, smuggling, and commercial fraud, and minimize tax arrears.

The state budget revenue estimate is built with a mobilization effort to achieve over 22% of GDP, including tax and fee revenues exceeding 21%. The domestic revenue estimate (excluding oil revenue) increases by at least an average of 14-16% compared to the estimated actual implementation in 2006.

2. The state budget expenditure estimate for 2007 is established based on the criteria and allocation standards for the state budget for 2007 decided by the Prime Minister. When building the budget estimate and allocating the budget for 2007, attention should be paid to the following contents:

a) In 2007, focus on allocating investment development expenditures for Programs and Target Programs for socio-economic development, poverty reduction from 2006 to 2010, prioritizing mountainous regions, Central Highlands, and ethnic minority areas with difficulties; pay attention to allocating capital for infrastructure investment in transportation, irrigation, energy development, rural infrastructure development; continue to prioritize capital allocation for education and training, science and technology, health care services, etc.

Ministries, sectors, and localities must allocate in the investment development expenditure estimate for 2007 to ensure sufficient counterpart funds for ODA projects; ensure funds for ongoing projects and works (especially key and urgent projects, unfinished construction projects that will be completed and put into use in the year); ensure funds for planning and preparation for investment; settle the amount of debt for completed basic construction works; repay the state budget for advance payments. The remaining portion should be allocated to new important projects and works, prioritizing national key projects, irrigation, rural transportation development, infrastructure in flood-prone and slow-flood areas, tourism infrastructure, village craft infrastructure, commercial infrastructure, aquaculture infrastructure, supporting trade promotion activities, expanding markets, etc.

Implement the additional criteria for targeted investment development capital from the central budget to the local budget and other targeted supplements according to the decisions of the Prime Minister.

b) Based on the allocation standards for the state budget for 2007, build the budget estimate for expenditures on developing educational and cultural affairs, healthcare, environment, science and technology, social affairs, ensuring activities related to national defense, security, administrative management of the state, activities of the Party, and mass organizations; ensure the allocation of state budget expenditures for the field of education and training in 2007 (including investment development expenditures, regular expenditures, and salary reform expenditures) reaching 20% of total state budget expenditures; the cultural information sector exceeding 1.5%; the science and technology sector reaching 2%; environmental protection activities exceeding 1%.

During the process of building the state budget estimate for 2007, ministries, sectors, and localities must link it with the implementation of Decree No. 130/2005/ND-CP dated October 17, 2005, of the Government on delegating autonomy and responsibility for personnel establishment and administrative management expenses to all state agencies; for public service units, it must be linked with the implementation of Decree No. 43/2006/ND-CP dated April 25, 2006, of the Government on delegating autonomy and responsibility for mission implementation, organizational structure, personnel establishment, and finance to public service units.

c) Regarding the budget estimate for implementing National Target Programs, Program 135 (Phase II), and the project to plant five million hectares of new forests: based on the list of National Target Programs for the period 2006-2010 already determined, relevant ministries and program management agencies must urgently coordinate with the Ministry of Planning and Investment and the Ministry of Finance to complete the report summarizing the final assessment for the period 2001-2005, establish goals and tasks, supplement and amend mechanisms and policies for National Target Programs for the period 2006-2010 to submit to the Prime Minister for decision; at the same time, determine specific goals, tasks, and estimates for 2007 for National Target Programs, Program 135 (Phase II), and the project to plant five million hectares of new forests, and send them to the Ministry of Planning and Investment and the Ministry of Finance for consolidation in the state budget estimate for 2007 to report to the Government, and then submit to the National Assembly as stipulated by the State Budget Law.

d) Continue to allocate the budget and mobilize other financial resources as prescribed to implement salary reform according to the Salary Reform Project.

The Ministry of Finance shall guide ministries, sectors, central agencies, localities, and budget-using units to proactively implement all measures to create sources for salary reform in accordance with the direction: reserve a portion of the revenue retained in 2007 under the current system for implementation; save at least 10% of regular expenditures in 2007 (excluding salaries and salary-like allowances); transfer unused salary reform funds from previous years (if any) to 2007 for continued implementation; local budgets use at least 50% of annual revenue increases, and also use unspent revenue increases from previous years transferred over (excluding land use fee revenue increases) to implement salary reform in 2007. After using these sources, if there is still a shortfall, the central budget will support ministries, central agencies, and localities to ensure sufficient sources for implementing salary reform as prescribed.

đ) For programs and projects using official development assistance (ODA) funds, they must prepare full budget estimates in accordance with the procedures and regulations stipulated by the State Budget Law and guiding documents and decrees of the Government on investment management and basic construction, on managing and using ODA funds, paying particular attention to detailing ODA funds and counterpart funds for each program and project, according to the nature of basic construction investment and service expenditures, ensuring consistency with the implementation schedule.

The central government budget and local government budgets at all levels must allocate contingency reserves in accordance with the State Budget Law to proactively respond to natural disasters, floods, epidemics, and urgent important tasks outside the budget estimate.

During the process of preparing the state budget estimate for the year 2007, ministries, sectors, and localities are responsible for proactively and fully forecasting all needs for expenditures to implement policies, systems, and new tasks (if any); ensuring that there will be no situation where, after the state budget estimate has been assigned by the competent authority, there is a lack of funds to carry out regular tasks, existing policies and systems, and newly emerging tasks.

3. Local State Budget Construction Work

The year 2007 is the first year of the new period of state budget stabilization according to the provisions of the State Budget Law; the local state budget estimate for 2007 is constructed with the aim of ensuring the development of the local state budget, increasing self-balancing capacity, reducing supplementary funding from higher-level budgets, or increasing the percentage (%) of revenue remitted to higher-level budgets compared to the previous stabilization period as stipulated by the State Budget Law.

The local state budget estimates for 2007 at all levels must be developed based on closely adhering to the objectives and tasks of the national state budget for 2007, as prescribed by the State Budget Law and guiding documents, while paying attention to the following key issues:

a) Building the state budget revenue estimate on the local level: based on the targets and plans for economic and social development during the 2006-2010 period approved by Party Congresses at all levels, the ability to achieve economic and social indicators and the state budget in 2006, forecasting economic growth and revenue sources for 2007 for each industry, sector, economic entities within the locality, and new revenue sources arising in the locality to accurately and comprehensively calculate revenue for each sector and each type of revenue according to regulations. The domestic revenue estimate (excluding oil revenue) should increase by a minimum of 14-16%, and the revenue estimate from import-export activities should increase by a minimum of 8-9% compared to the implementation in 2006.

b) Building the local state budget expenditure estimate: based on criteria and allocation standards for state budget expenditures in 2007, the development tasks of the locality in 2007, establish specific local state budget expenditure estimates for each spending area as prescribed.

Based on the state budget revenue estimate on the local level, the local state budget expenditure estimate is calculated based on criteria and allocation standards for state budget expenditures in 2007, determining the local state budget revenue share according to the division of revenue; determining the percentage (%) distribution for shared revenue sources between the central budget and local budgets, the amount of supplementary balance from the central budget to the local budget in 2007 (if applicable), and being stabilized during the new budget period.

For land use fee revenues, localities should allocate the budget estimate for basic construction investment corresponding to the investment in infrastructure economic and social projects and relocation and resettlement projects, and preparation of construction sites.

For revenues from lottery sales, in 2007, the central government will supplement the local budget with targeted funds corresponding to the annual lottery revenue estimate and will be stable for the period 2007-2010 to invest in welfare infrastructure, mainly focusing on education and healthcare areas.

Localities should proactively calculate the source of implementing salary reform as stipulated in point d, Section II of this Directive and the guidance of the Ministry of Finance.

e) Building the budget estimate to mobilize capital for development investment must be carried out in accordance with the provisions of the State Budget Law and Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government; ensuring that the balance of debt raised (including the amount expected to be raised in the year) does not exceed 30% of the local provincial state budget's investment construction expenditure estimate (for Hanoi and Ho Chi Minh City, raising not more than 100%). At the same time, proactively allocate local budget funds to repay loans and raised funds (both principal and interest) due according to the law.

In building the local state budget expenditure estimate, it is necessary to allocate state budget expenditures specifically for each spending area in the order of priority as stipulated in Clause 2, Section II of this Directive and in accordance with the provisions of the State Budget Law, including for investment construction expenditures, it is necessary to determine the completed construction debt, advance payments, etc., to proactively allocate the local state budget's investment construction expenditure estimate for 2007 to settle accounts; build the expenditure estimate to implement National Target Programs (the local component) based on determining the specific goals and tasks of each national target program in 2007 implemented locally.

Based on the allocation standard for subsidy and price support expenditure estimates as prescribed, localities should proactively allocate funds and implement subsidy and price support measures suitable to the actual situation in the locality regarding goods, products, support levels, support areas, etc.

Based on the balancing capacity of the local state budget, the implementation status of the estimates for items supplemented with targeted funds from the central budget to the local budget in 2007, and current policies and systems, build the expenditure estimate to implement important projects and tasks to request targeted supplements from the central budget according to point b, Clause 2, Article 29 of Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the State Budget Law.

4. Along with the preparation of the national state budget estimate for 2007, ministries, sectors, central agencies, localities, and units using the state budget should proactively conduct detailed evaluations and analyses of the results of state budget expenditures in 2006; focus on directing and organizing the settlement and approval of the 2005 state budget settlement in accordance with the provisions of the State Budget Law; proceed to handle and resolve any remaining issues and violations discovered and recommended by auditing and inspection agencies.

5. During the process of drafting the state budget for the year 2007, ministries, sectors, central agencies, and local authorities at all levels must fully implement the Government's Action Program on thrift and anti-waste pursuant to Decision No. 25/2006/QĐ-TTg dated January 26, 2006 of the Prime Minister; ensure that the preparation of the state budget, allocation, and utilization of the budget are truly thrifty and effective; comply with the Prime Minister's directive to cut the budget for the year 2007 regarding expenditures exceeding policy regulations in 2006.

Heads of ministries, central agencies, and local authorities must focus on directing a thorough review of all stages in the work of allocating, managing, and utilizing the state budget, particularly capital for basic construction investment and loans for aid, to ensure accurate allocation of the budget according to objectives, regulations, and recipients; management and utilization of the budget must be strict, with reporting, inspection, and auditing systems in place to prevent loss and waste.

6. Ministries and central agencies must prepare the state budget expenditure draft according to implementing units and important tasks, and submit it to the Ministry of Finance and the Ministry of Planning and Investment for consolidation and reporting to the Prime Minister.

Ministries, central agencies, and localities must proactively prepare detailed explanatory reports on their own state budget revenue and expenditure drafts for the year 2007 in accordance with regulations.

B. PROGRESS IN THE DEVELOPMENT OF PLANS AND ASSIGNMENT OF IMPLEMENTATION

I. Progress in developing plans

1. In June 2006, the Ministry of Planning and Investment and the Ministry of Finance shall guide the framework for the socio-economic development plan and the state budget draft for the year 2007 for ministries, sectors, localities, economic groups, and Corporation 91 as a basis for developing plans.

2. In June and July 2006, ministries, sectors, localities, economic groups, and Corporation 91 shall develop the socio-economic development plan and the state budget draft for the year 2007; submit reports to the Ministry of Planning and Investment and the Ministry of Finance before July 20, 2006 for consolidation and submission to the Government.

3. In August 2006, the Ministry of Planning and Investment and the Ministry of Finance shall consolidate the socio-economic development plan and the state budget draft for the year 2007; simultaneously, propose allocation schemes for planning indicators and the state budget.

4. In September 2006, the Ministry of Planning and Investment and the Ministry of Finance shall report to the Government the socio-economic development plan and the state budget draft for the year 2007, for the Government to submit to the National Assembly in accordance with the State Budget Law.

5. Before November 20, 2006, the Prime Minister shall assign the socio-economic development plan and the state budget for the year 2007 to ministries, sectors, localities, economic groups, and Corporation 91 based on the National Assembly resolutions on the state budget draft and tasks for 2007.

6. Before November 25, 2006, the Ministry of Planning and Investment and the Ministry of Finance shall provide detailed guidance on the socio-economic development plan and the state budget draft for the year 2007 to ministries, sectors, localities, economic groups, and Corporation 91.

7. Before December 10, 2006, ministries, sectors, and localities shall finalize the allocation plan for the socio-economic development plan and the state budget draft for subordinate levels based on the tasks assigned by the Prime Minister and the guidance of the Ministry of Planning and Investment and the Ministry of Finance.

II. Assignment of Implementation

1. The Ministry of Planning and Investment:

a) Take the lead and coordinate with the Ministry of Finance to calculate and determine various options and major balances as a basis for guiding ministries, sectors, and localities in developing the 2007 plan;

b) Take the lead and coordinate with the Ministry of Finance and centrally-administered provinces and cities to build a plan for stabilizing local budgets (development capital component) for the period 2007-2010;

c) Take the lead and coordinate with the Ministry of Finance and relevant ministries to study and build criteria and principles for allocating basic construction investment funds for central ministries and agencies in 2007; allocate supplementary targeted funds from the central budget to local budgets in 2007 to support basic construction and other targeted supplements, submit to the competent authority for decision-making, serving as a basis for building allocation plans and assigning targeted supplements for 2007 to localities;

d) Organize guidance on the development and consolidation of the socio-economic development plan for 2007;

đ) Take the lead and coordinate with the Ministry of Finance to forecast the development investment plan and the allocation scheme for basic construction investment; together with the Ministry of Finance and relevant ministries and sectors, appraise national target programs for the period 2007-2010 (in accordance with Circular No. 1275/VPCP-VX dated March 10, 2006 of the Government Office), forecast the plan and allocation scheme for 2007 for programs and projects. Consolidate the allocation plan for the national target program budget;

e) Work with ministries, sectors, and localities on the socio-economic development plan, investment, and national target programs for 2007.

2. Ministry of Finance:

a) Take the lead and coordinate with the Ministry of Planning and Investment and localities to build a plan for stabilizing local budgets for the period 2007-2010 (current expenditure component);

b) Guide ministries, sectors, and localities to assess the implementation of the state budget draft for 2006; forecast the state budget and notify the audit figures for the state budget revenue and expenditure draft for 2007 to ministries, sectors, and localities;

c) Take the lead and coordinate with the Ministry of Planning and Investment and related agencies to build and consolidate the state budget draft for 2007; work with central ministries and agencies on the state budget; work with provincial People's Committees under the Central Government (as stipulated by the State Budget Law) on the state budget draft for 2007.

3. Ministries, state agencies, economic groups, and Corporation 91:

a) Coordinate with the Ministry of Planning and Investment and the Ministry of Finance to build development tasks and the state budget draft within their respective areas of responsibility;

b) The ministries and sectors managing the National Target Program (as determined in Circular No. 1275/VPCP-VX dated March 10, 2006 of the Government Office) shall coordinate with the Ministry of Planning and Investment, the Ministry of Finance, and other central and local agencies to develop the content of the Program for the period from 2007 to 2010 and propose tasks and budget estimates for implementing the Program in 2007;

c) Ministries and state agencies, within their respective functions, based on calculations of exploitable resources, shall establish socio-economic targets, propose solutions, mechanisms, policies, new systems, or recommend amendments and supplements to existing systems and policies to be promulgated before the preparation of the state budget (before July 20, 2006), and notify the Ministry of Planning and Investment, the Ministry of Finance, and relevant agencies as a basis for developing plans and state budget estimates;

4. People's Committees of provinces and centrally-administered cities

Guide, organize, and direct provincial Departments of Planning and Investment and Departments of Finance to closely cooperate with other provincial departments and sectors in developing socio-economic development plans and state budget estimates, organize broad consultations on draft plans to achieve high consensus, submit to competent authorities for decision-making, and report to central agencies as required;

The Prime Minister requests ministers, heads of ministerial-level agencies, heads of government agencies, chairpersons of provincial People's Committees under the Central Government, state-owned economic groups, and state-owned corporations to implement this Directive;