Resolution No. 25/2016/QH14 on the five-year national financial plan for the period 2016-2020

RESOLUTION
ON THE NATIONAL FINANCIAL PLAN FOR THE 2016-2020 PERIOD
THE PERIOD 2016-2020

¯¯¯¯¯¯¯¯¯
OF THE NATIONAL ASSEMBLY
SOCIALIST REPUBLIC OF VIET NAM

On the basis of the Constitution of the Socialist Republic of Vietnam;

Pursuant to the State Budget Law No. 83/2015/QH13;

Based on the Report No. 453/BC-CP dated October 18, 2016 of the Government; the Audit Report No. 179/BC-UBTCNS14 dated October 19, 2016 of the Committee for Finance and National Budget; the Report on Incorporation and Explanation No. 48/BC-UBTVQH14 dated November 8, 2016 of the Standing Committee of the National Assembly and the opinions of the National Assembly deputies,

RESOLUTION:

Article 1. General Objective

Continue to improve the system of institutions and financial mechanisms of the country; effectively mobilize, distribute, manage, and utilize financial resources to meet the requirements and development goals of the national economy; gradually restructure state budget revenues and expenditures; balance between accumulation and consumption, thoroughly save, prevent waste, use public investment capital efficiently, reasonably invest in human resources, and properly address social welfare issues, ensuring national defense and security; strictly enforce financial discipline while promoting administrative reform, modernization, and strengthening inspection, audit, and financial supervision work; significantly reduce and strictly control the state budget deficit, government debt, and foreign debt of the nation, ensuring macroeconomic stability and national financial security.

Article 2. Specific Objectives

1. Strive for total state budget revenue during the 2016-2020 period to be approximately 6,864 trillion VND, increasing about 1.65 times compared to the 2011-2015 period; ensure the ratio of funds raised into the state budget is not less than 23.5% of GDP, of which from taxes, fees, and charges is about 21% of GDP; the average domestic revenue ratio is about 84-85% of total state budget revenue.

2. Gradually restructure state budget expenditures in a positive direction. Total state budget expenditures during the 2016-2020 period will be approximately 8,025 trillion VND, including increasing the proportion of development expenditure to about 25-26% of total state budget expenditures; reducing the proportion of recurrent expenditure below 64% of total state budget expenditures; prioritizing payment of debts and national reserve funds.

Total state budget development expenditure during the 2016-2020 period will be a maximum of approximately 2,000 trillion VND. Of this, expenditure from government bonds is 260 trillion VND (including 60 trillion VND remaining from the 2014-2016 period), from foreign sources is 300 trillion VND, from selling part of state-owned shares in some enterprises is 250 trillion VND (including 10 trillion VND expected to offset the central budget revenue shortfall in 2015 but not yet utilized). Allocate 1,800 trillion VND, reserve 10% unallocated for risk management regarding revenue and urgent investment needs in operation. Based on actual conditions, the allocation for development expenditure will be reviewed and decided annually in the state budget estimate.

3. The ratio of state budget deficit during the 2016-2020 period shall not exceed 3.9% of GDP, with the central budget deficit not exceeding 3.7% of GDP and local budget deficit not exceeding 0.2% of GDP. Strive to significantly reduce the state budget deficit to not more than 3.5% of GDP by 2020 to achieve a positive state budget balance and ensure government debt within permissible limits.

4. Ensure the safety of government debt, with the goal of:

a) Annual government debt not exceeding 65% of GDP, government debt not exceeding 54% of GDP, and foreign debt of the nation not exceeding 50% of GDP.

b) Foreign debt repayment obligations of the nation under 25% of total goods and services export value.

c) Direct government debt repayment obligations (excluding loan rescheduling) not exceeding 25% of annual state budget revenue.

Article 3. Orientation

1. Regarding state budget revenue: Continue to amend and supplement tax policies, gradually increase the proportion of GDP mobilized into the state budget, ensuring that the domestic revenue ratio does not fall below the prescribed level, in line with the country's development. Ensure a reasonable ratio between direct and indirect taxes; increase the domestic revenue ratio; reduce the ratio of revenues from crude oil, natural resources, and import-export activities; effectively exploit revenue sources from dividends and profits distributed from state capital at enterprises. Implement tariff reductions according to free trade agreements and international economic integration. Vigorously implement measures to prevent tax losses, significantly reduce overdue tax debts and other state budget revenues. Minimize the formulation of policies that reduce state budget revenues.

2. Regarding state budget expenditure: Maintain a reasonable structure between accumulation and consumption, increase the ratio of investment development spending, reduce the ratio of recurrent spending, ensure spending for human resources, social welfare, and defense and security. Strive to allocate 20% of total state budget spending for education and training; 2% of total state budget spending for science and technology. Implement preferential policies for those who have contributed to the revolution. Adjust the base salary, pension, and preferential allowances for those who have contributed to the revolution by an average of about 7% per year; based on actual circumstances, specific adjustment levels will be reviewed and decided by the National Assembly in the annual state budget estimate.

3. Regarding the state budget deficit: Significantly reduce the state budget deficit ratio to ensure specific goals. Reorganize public debt, reduce the ratio of foreign debt, increase the ratio of domestic debt. Develop the bond market, limit the issuance of international bonds, maintain the term of government bonds over five years as the mainstay, extend the average term of government bonds issued during the period 2016-2020 to approximately 6-8 years.

Article 4. Tasks and Solutions for Implementation

1. Vigorously complete financial systems and national financial mechanisms to further concretize the Constitution, ensuring synchronization, transparency, stability, and suitability with practical requirements set forth during the process of socio-economic development and international integration. Implement restructuring of state budget revenue and expenditure in accordance with established goals and orientations. Gradually implement budget management based on performance outcomes (outputs); conduct budget statistics according to international practices and standards. Effectively implement measures to ensure national financial security and safety; resolutely reduce the state budget deficit.

2. Implement policy adjustments aimed at broadening the tax base, adjusting the scope and targets; review and narrow the exemption and reduction range; study the introduction of property tax suitable to Vietnam's conditions. Minimize the inclusion of social policies within tax laws. Review preferential policies affecting state budget revenues.

3. Organize the effective implementation of new regulations on state budget management under the State Budget Law, rearrange expenditures, thoroughly save, combat waste, increase service revenue; do not issue policies, systems, programs, and projects without balanced funding; strictly control advance appropriations, reallocation of funds, and spending from the state budget reserve fund. Implement strict fiscal policy, coordinating synchronously with monetary policy.

4. Strictly enforce financial discipline in state budget revenue and expenditure. Strengthen inspections, audits to prevent tax losses, curb fraudulent trade practices, transfer pricing, tax evasion, wastage in state budget expenditure, especially in basic construction investment spending. Actively urge and handle overdue tax debts and other state budget revenues; minimize overdue tax debts. Severely and promptly deal with violations of laws on state budget management, revenue, and expenditure, enhancing the responsibility of heads of ministries, sectors, localities, and units in managing the state budget. Resolutely cut unnecessary expenditures already included in the budget but not needed or delayed; limit reallocation until December 31 each year to strictly control the deficit and annual public debt ceiling.

5. Implement decisively and comprehensively related mechanisms and policies concerning the reform of financial mechanisms for public institutions, particularly accelerating the implementation schedule for adjusting public service fees towards full cost recovery, contributing to enhancing the autonomy of these units; establish a phased implementation of market prices for education, training, and healthcare linked with support for social policy beneficiaries and poor households; create conditions for restructuring state budget expenditure, allocating resources for salary reform, while intensifying staff reduction and organizational restructuring.

6. Vigorously restructure and enhance the quality of governance and operational efficiency of state-owned enterprises. Study the establishment of a specialized agency to represent ownership and manage state capital. Accelerate the implementation of divestment from non-core industries and state capital in state-owned enterprises where state control is not necessary or dominant according to market mechanisms to maximize state and people's interests. Review financial management mechanisms for some state-owned enterprises and enterprises with state capital to comply with the provisions of the Law on Management and Use of State Capital Investment in Production and Business Operations and relevant tax laws. Utilize revenues from selling state capital in enterprises effectively for development investment.

7. Closely monitor public debt indicators within permissible limits; minimize the issuance of new government guarantees for loans; strictly control budget deficits and local government debts; allocate sufficient resources to ensure timely repayment of debts. Do not convert loan funds for relending, government guarantees into state budget disbursements. Do not use the state budget to restructure state-owned enterprises, handle non-performing loans of state commercial banks, provide registered capital for commercial credit institutions, or contribute shares in international financial organizations. New loans shall only be implemented after a thorough assessment of their impact on the scale of public debt and the ability to repay in the medium term.

Mobilize government bonds to ensure that the proportion of government bonds with a maturity of five years or more is at least 70% of the total volume of issued government bonds, to meet the task of raising funds for the budget, while ensuring the goal of extending the average maturity of the debt portfolio and managing risks.

8. Continue to improve the legal system for the financial market, insurance, and accounting and auditing services; enhance the effectiveness of financial resource utilization in managing and using public assets; strengthen and proactively integrate internationally in the field of finance; improve the legal system for public debt management towards reasonable regulation of public debt, consistent with international practices and Vietnam's reality.

9. Continue to vigorously reform administrative procedures in the financial sector. Modernize national financial management through the vigorous application of information technology and the establishment of a national financial database system. Promote and enhance transparency of budget financial information as prescribed. Reduce the time required for tax and customs administrative procedures.

State-owned enterprises that have been assigned by the Ministry of Agriculture and Rural Development to conduct offshore wind power project surveys before the effective date of this Circular shall continue to implement according to the assigned documents; any new matters arising after the effective date of this Circular shall be implemented in accordance with the provisions of this Circular.

1. The Government, ministries, central agencies, and local authorities at all levels shall effectively organize the implementation of this Resolution according to their functions and responsibilities.

2. The Standing Committee of the National Assembly, the Finance-Budget Committee, the National Ethnic Council, other Committees of the National Assembly, Delegations of the National Assembly, and National Assembly deputies shall supervise the implementation of this Resolution.

3. The Central Committee of the Vietnam Fatherland Front, member organizations of the Front, and social organizations established under the law shall supervise and encourage all strata of the people to implement this Resolution according to their supervisory responsibilities.

This Resolution was adopted by the National Assembly of the Socialist Republic of Vietnam, the fourteenth session, second meeting, on November 9, 2016.