Circular No. 44/2005/TT-BTC guiding the preparation of the State budget estimate for 2006 and the period 2006-2010

CIRCULAR

Guidelines for preparing the state budget estimate

for 2006 and the period 2006-2010

Pursuant to Directive No. 18/2005/CT-TTg dated May 31, 2005 of the Prime Minister on the preparation of plans for economic and social development and the state budget estimate for 2006; the Ministry of Finance guides the work of evaluating the implementation of state budget tasks in 2005 and the period 2001-2005 and the preparation of the state budget estimate for 2006 and the period 2006-2010 as follows:

A. EVALUATION OF THE IMPLEMENTATION OF STATE BUDGET TASKS IN 2005 AND THE PERIOD 2001-2005:

Based on the state budget tasks decided by the National Assembly, based on the goals and tasks of economic and social development and the state budget revenue and expenditure estimates for 2005 assigned by the Prime Minister, leveraging the significant achievements obtained in the first six months of the year, ministries, central agencies, and localities in the last six months of 2005 focus on implementing all measures according to Resolution No. 33/2004/QH11 of the National Assembly on the state budget estimate for 2005, Resolution No. 01/2005/NQ-CP dated January 14, 2005 of the Government on key measures to guide the implementation of the socio-economic plan and state budget for 2005, and Circular No. 111/2004/TT-BTC dated November 19, 2004 of the Ministry of Finance guiding certain points on the organization and implementation of the state budget estimate for 2005. Strive to fully and exceed all targets and tasks of socio-economic development and the state budget for 2005 and the period 2001-2005.

Along with organizing the implementation of state budget tasks for 2005, ministries, central agencies, People's Committees of provinces and centrally governed cities implement the evaluation of the results of state budget task implementation in 2005 and the period 2001-2005 as the basis for building the state budget estimate for 2006 and the period 2006-2010 according to the following main contents:

I. Evaluation of the implementation of state budget revenue tasks in 2005 and the period 2001-2005:

1. Evaluation of the results of socio-economic development task implementation in 2005 and the period 2001-2005; focusing on analyzing and evaluating the following main tasks:

- Evaluation of the results of socio-economic development tasks and key indicators in 2005 and the period 2001-2005 in fields assigned and managed by the State: results of economic development tasks (GDP growth rate,...); economic structure transformation; results of major product production and consumption; results of social development tasks,...

- Results of restructuring, reforming, shareholding, and improving the efficiency of production and business, financial management of SOEs in 2005 and the period 2001-2005.

- Results of export and import turnover in 2005 and the period 2001-2005 in sectors, industries, regions, including: export and import turnover subject to tax of each type of goods, major groups of goods,...

- Planning and managing infrastructure facilities at the local level, managing the exploitation of resources from land funds for investment in infrastructure development; results of land use rights auction activities aimed at increasing revenue and investment development at the local level in 2005 and the period 2001-2005.

2. Evaluation of the results of state budget revenue task implementation in 2005 and the period 2001-2005; focusing on evaluating and analyzing the following main contents:

- Results of state budget revenue collection in 2005 and the period 2001-2005 compared to the tasks assigned by the Prime Minister; compared to the targets set by the Party Congress resolutions of the locality for the period 2001-2005 and the targets set by the People's Councils annually. For 2005, strive to achieve domestic revenue (excluding oil revenue and land use fee revenue) increase by at least 5% compared to the estimate assigned by the Prime Minister.

- Evaluate and analyze factors influencing and affecting the results of revenue collection in 2005 and the period 2001-2005 such as: new production and business capacity; newly established enterprises; joint venture projects and foreign-invested projects put into operation; results of production and consumption indicators; major product output; cost; selling price,...

- Evaluate and analyze the impact of additional, revised policies and revenue management mechanisms in 2005 and the period 2001-2005 on the implementation of revenue tasks, such as: value-added tax, corporate income tax, high-income individual income tax, special consumption tax, revenues related to real estate; revenue management methods under self-declaration and self-payment mechanisms,...

- Evaluate and analyze the situation of fee and charge collection in 2005 and from the start until the end of 2005 by organizations at the central, provincial, district, and commune levels according to Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Law on Fees and Charges.

- Evaluate and analyze the results of organizing and implementing inspection and control activities to prevent revenue loss, smuggling, and commercial fraud; the situation of tax arrears in 2005 and the period 2001-2005; clearly identify the amount of tax arrears carried over from 2004, the tax revenue generated in 2005, the amount collected in 2005, and the amount to be collected in 2006. Summarize accurately the total tax arrears, classify tax arrears by time and cause.

- The situation of VAT refund declaration and processing by exporting enterprises, construction projects,... Amount of VAT refund generated in 2005; amount refunded to enterprises in 2005; estimated amount of 2005 VAT refund to be processed in 2006.

II. Evaluation of the implementation of state budget expenditure tasks in 2005 and the period 2001-2005:

1. Regarding the task of development investment expenditure:

1.1. Evaluation of the results of organizing the implementation of construction works and projects approved for implementation in 2005 and the period 2001-2005: Number, approved budget estimate, completed volume, settled volume,... of construction works and projects implemented in 2005 and the period 2001-2005 (including specifically the number of completed works and projects; the number of ongoing works and projects).

- Evaluation of the allocation of funds for implementing construction investment projects in 2005 and the period 2001-2005: sources from the State budget, education bonds, government bonds, and other sources as prescribed. For provinces and cities, evaluate the implementation of Clause 3, Article 8 of the State Budget Law regarding capital mobilization for infrastructure investment and the situation of repaying maturing debts and outstanding debt mobilized up to December 31, 2005.

- Summarize, analyze, and compare the capital requirements for approved construction investment projects with the allocated funds for implementation in 2005 and the period 2001-2005.

- Evaluate and analyze the situation of accumulated investment arrears and the results of measures to address such arrears.

- Evaluate compliance with regulations on investment procedures; allocation of funds; timeframes and progress of construction investment projects during the period 2001-2005.

- Evaluate and analyze the effectiveness of construction investment in 2005 and the period 2001-2005; existing issues, causes, and solutions; focusing on the following main tasks:

+ Evaluate the results of implementing key national, sectoral, and local projects; results of implementing ODA projects,...

+ Evaluate the implementation of programs to reinforce irrigation canals, rural transportation, aquaculture infrastructure, and craft village infrastructure in 2005 and the period 2001-2005.

+ Evaluate the investment tasks from government bonds and education bonds in 2005 and from their implementation until the end of 2005.

+ Evaluate the investment expenditure from land use funds in 2005 and the period 2001-2005; estimate the amount not yet implemented that needs to be transferred to 2006 for implementation.

- For 2005, specifically evaluate the situation of allocating and assigning the budget for construction investment expenditures in 2005; the execution of reallocation and reduction of expenditures for unallocated funds; the ability to implement and settle payments for all projects and works of the 2005 task. Evaluate the achievements and remaining issues to continue addressing regarding the policy of concentrating funding, avoiding dispersion; summarize and evaluate the results of implementing the National Assembly Resolution and Government Resolution on settling construction investment debts according to the prescribed regime; evaluate the results of implementing regulations on construction investment management; investment effectiveness, effectiveness of completed projects in the year, final settlement of completed construction projects.

1.2. Evaluate the results of implementing the task of supporting production and business development according to the law in 2005 and the period 2001-2005: Implementation and management of the Urban Development Investment Support Fund; Credit Guarantee Fund for Small and Medium Enterprises (for localities that have established the fund); support policies for public enterprises; support policies for trade development and export promotion,...

2. Regarding regular expenditure tasks:

2.1. Evaluate and analyze the results of managing and using the budget to fulfill economic and social development tasks according to the assigned indicators and tasks by the state for Ministries, central agencies, localities, and units in 2005 and the period 2001-2005. Focus on evaluating the results of implementing important tasks of each sector, large programs, and projects, such as: Implementing the task of reforming general education programs - reforming textbooks, universalizing lower secondary education, training scientific and technical personnel abroad; implementing policies to develop education in mountainous regions; implementing free medical examination and treatment policies for the poor, children under six years old; results of disease prevention, medical examination, and treatment; implementation of policies for families of policy beneficiaries, people with meritorious service, and social groups; results of implementing national-level scientific research topics; seed programs; trade promotion; land administration, environmental management tasks,...

2.2. Evaluate the results of implementing mechanisms, policies, and expenditure regimes in 2005 and the period 2001-2005 to fulfill the tasks of Ministries, central agencies, localities, and units. Focus on evaluating the results of implementing the following mechanisms and policies:

- Evaluate the results of implementing the Decree on thrift and anti-waste; the situation of vehicle purchases, telephone equipment procurement, rental and purchase of office premises, conference and reception expenses; results of implementing fuel savings and anti-waste according to Directive No. 06/2003/CT-TTg dated March 27, 2003 of the Prime Minister;...

- Evaluate the results of implementing Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government on financial systems applicable to revenue-generating public institutions; Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister on expanding pilot wage and administrative management cost decentralization for state administrative agencies.

- Evaluate the results of implementing Decision No. 21/2003/QĐ-TTg dated January 28, 2003 of the Prime Minister on state budget support for political-social occupational organizations, social organizations, and social-professional organizations for activities linked to state tasks.

2.3. Ministries and sector management agencies organize evaluations and analyses of total social resources and resource structure invested in sector development; results of mobilizing social resources for sector development; existing issues, causes, and solutions in the future to better mobilize social resources for sector development.

2.4. Evaluate and analyze the structure of regular expenditure by categories: salary, salary-like allowances, and deductions based on salary (social insurance, health insurance, trade union fees); regular operational expenses; extraordinary or non-regular expenses (procurement, repairs,...) in 2005 and the period 2001-2005 of Ministries, agencies, and localities.

2.5. Evaluate the situation of allocating and assigning the regular expenditure budget for 2005, the implementation of adjustments and transfers between budget tasks and units in the organizational implementation.

2.6. Evaluate the work on administrative reform procedures in budget implementation in 2005 and the period from 2001 to 2005; clearly identify existing issues, causes, and solutions.

3. For national target programs, Program 135, and the project to plant five million hectares of new forests:

3.1. Evaluate the results of implementing the national target program, Program 135, and the project to plant five million hectares of new forests compared to the targets set by the Prime Minister for the period from 2001 to 2005; clearly state the achievements made; existing issues, causes, and solutions.

3.2. Evaluate the mechanisms, policies, and expenditure regimes for implementing the programs and projects in 2005 and the period from 2001 to 2005; clearly state the achievements made, existing issues, causes, and solutions.

3.3. Evaluate the organization and management of the implementation of the programs and projects in 2005 and the period from 2001 to 2005; clearly state the achievements made, existing issues, causes, and solutions.

3.4. Evaluate the situation of budget allocation and disbursement for target programs; based on the allocated budget and progress of implementation, the managing agencies of the national target programs, projects, and localities assess the volume of implementation in 2005 and the period from 2001 to 2005 in detail for each program and project; the management and results of implementing the target programs according to Decision No. 42/2002/QD-TTg dated March 19, 2002 of the Prime Minister; Decision No. 135/1998/QD-TTg dated July 31, 1998 and Decision No. 138/2000/QD-TTg dated November 29, 2000 of the Prime Minister regarding Program 135; Decision No. 661/QD-TTg dated July 29, 1998 on the objectives, tasks, policies, and implementation of the project to plant five million hectares of new forests.

4. Evaluate the results of implementing the wage increase and salary reform systems as prescribed: The results of reviewing and determining the financial needs for implementing salary reform; the results of implementing financial measures to create resources for salary reform from: 10% savings from regular expenditures (excluding salaries and allowances with the nature of salaries); 35-40% of retained revenue according to the prescribed regime; from increased revenue (50% for local budgets);... and determine the financial resources to be carried over to 2006 to continue implementing salary reform in 2006.

5. For provinces and centrally-administered cities: In addition to the above requirements, it is necessary to focus on evaluating the implementation of the following tasks:

- Financial resource mobilization efforts at the local level to implement economic and social development tasks.

- Evaluate and analyze the results of implementing the budget expenditure structure: investment expenditures, regular expenditures,... to ensure the requirements for local development investment; the results of implementing the National Assembly's Resolution on preventing scattered and dispersed investment; handling construction investment debts,...

- Evaluate and analyze the results of implementing infrastructure investment tasks as per the Prime Minister's decisions such as Decision No. 168/2001/QD-TTg dated October 30, 2001, Decision No. 186/2001/QD-TTg dated December 7, 2001, Decision No. 120/2003/QD-TTg dated June 11, 2003, Decision No. 134/2004/QD-TTg dated July 20, 2004 of the Prime Minister,...

- Evaluate the results of implementing the task of budget allocation, implementing state policies and programs aimed at economic and social development, poverty reduction (implementing national policies on poverty reduction; education, health, cultural, economic and social development programs in difficult areas, ethnic minority areas, mountainous regions,...); implementing social policies, policies for those who have rendered meritorious service to the revolution, participants in the resistance war and their children affected by Agent Orange, free medical examinations and treatments for the poor, children under six years old, etc.

- Budget allocation and use of reserves to fulfill security and defense tasks; prevention and control of diseases, natural disasters, droughts, floods, avian influenza, etc.

B. BUDGET ESTIMATION WORK FOR THE STATE BUDGET IN 2006 AND THE PERIOD FROM 2006 TO 2010:

Ministries, sectors, and localities organize the work of preparing the state budget revenue and expenditure estimates for 2006 and the period from 2006 to 2010 (broken down by year) in accordance with the State Budget Law and guiding documents; pay attention to the main contents as follows:

I. Objectives:

- The state budget estimate for 2006 and the period from 2006 to 2010 contributes to effectively fulfilling the tasks of economic and social development; poverty reduction; ensuring national security and defense; implementing the Party and State's policy of actively integrating into the international community throughout the country, as well as within each ministry, sector, and locality.

- The state budget estimate for 2006 and the period from 2006 to 2010 is built on the basis of strictly implementing tax laws, collection regulations, and tax commitments in international integration; implementing reasonable mobilization policies to encourage enterprises to accumulate capital for production and business development, ensuring a stable and favorable business environment; promoting measures to reduce production costs; enhancing competitiveness and economic efficiency, stabilizing macroeconomic conditions; accelerating structural economic transformation; continuing to restructure and improve the efficiency of state-owned enterprises; creating a stable and solid revenue source, ensuring financial resources for the State to fulfill important tasks, increasing social investment, enhancing the country's financial potential, and laying the foundation for future development.

- Concentrate on budget allocation to create a significant shift in implementing strategic national tasks: Ensuring capital for key national projects and works; National Target Programs, poverty reduction programs; focusing on investment in economic and social development in mountainous and midland northern provinces, coastal central provinces, Central Highlands, Southwest region, border areas with difficult conditions, ethnic minority regions; developing education-training, science and technology according to Resolution No. 2 (Session VIII) of the Party Central Committee; increasing investment in environmental protection tasks according to Resolution No. 41 of the Politburo; increasing investment in healthcare, culture, ...; increasing funding for poverty reduction work according to new poverty standards; ensuring defense, security, maintaining social order and safety; ensuring funding for policies and systems for each sector and region; promoting socialization in education-training, healthcare, culture, sports, ... Fully implement new mechanisms for financial management, staffing management, and professional task development for revenue-generating public institutions, expanding cost and staffing quotas for administrative state agencies as prescribed by the Government and the Prime Minister; fully implement policies to create sources for salary reform. Budget estimates must be closely concentrated, frugal, efficient, and prevent waste, dispersion, and fragmentation. Ensure positive and stable balance of the State budget for each locality; ensure national financial security and budget safety for each locality.

II. Some Main Contents:

The State budget estimate for 2006 and the period 2006-2010 is built in accordance with the provisions of the Law on State Budget, Decree No. 60/2003/ND-CP dated June 6, 2003 of the Government, Directive No. 18/2005/CT-TTg dated May 31, 2005 of the Prime Minister, Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance, and other related documents, paying particular attention to the following main contents:

1. Work on building the State budget revenue estimate for 2006 and the period 2006-2010:

1.1. The revenue estimate must be built based on a thorough analysis and forecast of economic growth, market fluctuations, prices, etc.; implementing measures to encourage production and business, expand markets, increase exports, and fully implement commitments under the process of international economic integration (AFTA, WTO...). Specifically, for each industry and locality, the targets for economic and social development in 2006 as directed by the Prime Minister in Directive No. 18/2005/CT-TTg should be concretized: GDP growth rate over 8%, industrial value added growth rate at 10.5%, service value added growth rate at 8%, agricultural value added growth rate over 3.5%, etc., to serve as the basis for building the State budget estimate for 2006 and the period 2006-2010.

1.2. Implement the Tax Laws and Tax Ordinances decided by the National Assembly and the Standing Committee of the National Assembly. For 2006, pay special attention to the revised and supplemented tax collection policies and regulations issued in 2005, such as Circular No. 12/2005/TT-BTC dated February 4, 2005 amending and supplementing some points guiding the implementation of Decree No. 147/2004/NĐ-CP dated July 23, 2004 of the Government detailing the implementation of the Tax Ordinance on income tax for high-income individuals; Circular No. 05/2005/TT-BTC dated January 11, 2005 of the Ministry of Finance regarding the guidance on tax regimes applicable to foreign organizations without legal personality and foreign individuals conducting business or generating income in Vietnam; Circular No. 18/2005/TT-BTC dated March 8, 2005 amending and supplementing some points guiding the implementation of Decree No. 149/2003/NĐ-CP dated December 14, 2003 of the Government detailing the implementation of the Special Consumption Tax Law and the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law,...

1.3. Effectively organize and implement the management of State budget revenue; strengthen measures to manage revenue, prevent revenue loss and tax arrears; combat commercial fraud and tax evasion.

1.4. The State budget revenue estimate must accurately and comprehensively include all revenue items as stipulated by tax laws and current revenue regulations. The State budget revenue estimate should be positive, stable, highly feasible; nationwide, the mobilization target should aim to exceed 22% of GDP, with tax and fee revenue exceeding 21% of GDP. For ministries, sectors, and centrally-administered cities and provinces, the domestic revenue estimate (excluding oil revenue and land use fee revenue) should increase by a minimum of 12-14% compared to the previous year's actual performance (for the 2005 performance level, it is required to aim for a minimum increase of 5% compared to the revenue estimate assigned by the Prime Minister).

Build specific revenue estimates for each revenue area: revenue from state-owned economy, revenue from foreign-invested enterprises, non-state revenue, etc. In each area, calculate according to each type of tax; build from the base of production and business operations. Report clearly the revenue estimates for balancing the State budget and the revenue estimates managed through the State budget according to the prescribed regulations. Prepare and report the revenue estimate for 2006 and the period 2006-2010 in accordance with the forms specified in Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance and supplementary forms of this circular.

2. Work on building the State budget expenditure estimate for 2006 and the period 2006-2010:

Based on the assessment of the results of economic and social development tasks in 2005, the period 2001-2005, and the goals and key tasks for 2006 and the period 2006-2010, ministries, sector management agencies, and provincial people's committees at the central level and localities, and budgetary units at all levels should prepare the State budget expenditure estimate for 2006 and the period 2006-2010 within the scope of the preliminary State budget expenditure estimate for 2006 and the period 2006-2010 announced by the Ministry of Finance; based on expenditure regulations and standards, taking into account the volume of assigned tasks, concentrate funds on important and main tasks, thoroughly economize and prevent waste. Build the State budget expenditure estimate for 2006 and the period 2006-2010 by sector. At the same time, ministries, central agencies, and localities should urgently implement socialization tasks according to Resolution No. 05/2005/NQ-CP dated April 18, 2005 of the Government.

Concentrate on budget allocation to implement important tasks for economic and social development, ensure national security and defense, and eradicate poverty, including:

2.1. Building the investment development expenditure budget:

Ensure funding for key projects according to their implementation progress, important projects completed and put into use within the year; counterpart funds for ODA projects according to commitments; proactively allocate in the 2006 budget to settle investment construction debts from sources already implemented since 2005; at the same time, allocate and organize the implementation of the budget so that from 2006 onwards, no new construction debts will be generated; allocate the budget to repay the full amount of temporarily borrowed funds that must be repaid within the year as stipulated; preparation capital for projects and works scheduled to start construction this year and in the coming years.

- Prioritize increasing investment capital to implement policies for economic and social development in mountainous and midland provinces in the North, coastal areas in Central Vietnam, the Central Highlands, Southwest, border areas with difficulties, ethnic minority regions, provinces with wide areas and large populations, weak infrastructure; prioritize allocating capital for projects under poverty reduction programs, Program 135, the project to plant five million hectares of forests, settlement projects; state health facilities at district and commune levels; national cultural heritage works; continue to allocate capital for water conservancy, rural transportation infrastructure development, flood control infrastructure, aquaculture infrastructure, village craft infrastructure, tourism infrastructure, markets; support trade promotion activities, expand markets,...

- Prioritize the budget and implement measures to mobilize financial resources to fulfill tasks related to restructuring the economy, accelerating industrialization and modernization of agriculture and rural areas;

- For Group C projects, ensure funding to complete within a maximum period of two years; for Group B projects, ensure funding to complete within a maximum period of four years; stop the practice of spreading out and prolonging ineffective investment periods. Only include newly completed investment construction procedures according to regulations and approved before October of the previous year in the annual budget expenditure plan.

- Allocate investment development expenditures for local infrastructure from land use revenue, including revenue transferred from the previous year to the next year (if applicable), in accordance with the prescribed regulations.

- Project leaders who borrow funds for investment projects must arrange corresponding capital for these projects in accordance with the signed agreements and domestic financial regulations to not affect the implementation schedule.

- For interest rate subsidy expenses, management fees of the Development Support Fund, supplementary state reserves,... base the budget on the actual situation of the previous year and the tasks of the budget year to build the budget according to current regulations.

- Ministries, central agencies, and localities assigned tasks for investment construction from government bonds by the Prime Minister shall prepare the budget for expenses from this source according to the prescribed regulations.

2.2. Build the budget for educational and training services, science and technology, healthcare, culture and society, sports, economic services, ensuring national security and defense, administrative management, Party, mass organizations,... based on the verified figures announced; the budget for the year implemented by the competent authority (excluding unexpected expenses in the implementation year but not in the budget year) and the standard cost regulations. Prioritize allocating funds to implement established policies and important tasks assigned by the Prime Minister to each sector.

- Nationwide, allocate the state budget expenditure plan for education, training, and vocational training in 2006 (including both investment and regular expenditures, additional salary increases) to reach 18.6%, striving to reach 20% by 2008; cultural information field to reach 1.5%, striving to reach 1.8% by 2008; science and technology field to reach 2% and environmental field over 1% of total state budget expenditures. Allocate the budget for health services to ensure established standards, quotas, and subsidies for medical examinations and treatments for the poor, free medical examinations and treatments for children under six years old.

- The budget for economic service construction is based on the volume of tasks assigned by the competent authority and the prescribed budget cost regulations; focusing on important tasks: maintenance and repair of critical socio-economic infrastructure systems; agricultural, forestry, and fishery promotion tasks; land administration services,... contributing to promoting growth and restructuring the economy.

- For public institutions with income, build a stable budget according to current regulations and the requirements of Resolution No. 05/2005/NQ-CP dated April 18, 2005 of the Government. For program and research topic expenses funded by the State and ministries, expenses for implementing state orders, counterpart funds for projects with foreign capital, and other important expenses, units shall prepare the budget according to current regulations and guidelines in this circular, while fully explaining the calculation bases.

- From 2006, training, healthcare, science and technology expenses in enterprises and state-owned corporations shall be included in enterprise costs according to prescribed regulations; the state budget will not allocate supporting funds according to Directive No. 18/2005/CT-TTg dated May 31, 2005 of the Prime Minister.

- Budget for price subsidies for policy goods:

+ For postal and telecommunication service subsidies, price subsidies, and provision of certain policy goods without charge, support for investment in developing community radio and broadcasting stations in mountainous and ethnic minority areas in 2006, localities shall implement stably at the level of 2005, supplemented by the central budget with targeted funds for local budgets.

+ The budget estimate for implementing the policy of providing free newspapers and magazines to ethnic minority and mountainous regions according to Decision No. 1637/QD-TTg dated December 31, 2001, and document No. 1423/CP-VX dated September 30, 2004, of the Government.

+ The budget estimate for price subsidies for publication, seedling preservation subsidies, etc., shall be implemented according to current regulations. Ministries, central agencies, localities, and units need to calculate subsidy expenses based on the quantity, cost, transportation costs, and specific subsidy levels for each item as stipulated by the regulations.

- The budget estimate for administrative management expenses of state agencies, the Party, and mass organizations: For state administrative agencies piloting the allocation of staffing quotas and administrative management budgets, the budget estimates should be prepared according to current regulations.

- For expenditure tasks funded from borrowed capital and aid, detailed budget estimates must be established for each project and sufficient counterpart funds for Vietnam must be calculated according to commitments and regulations.

- Budget estimates for administrative state units and public service units must fully reflect expenditure tasks from fees, charges, and other revenues retained by the units according to regulations.

2.3. Budget allocations and mobilization of financial resources to implement salary reform under the Salary Reform Project for the period 2003-2007 have been decided: Ministries, sectors, central agencies, localities, and budget-using units must prepare budget estimates for salary reform based on continuing measures to generate salary reform funds at each agency and unit from retained revenue sources (at least 40%, except for the health sector which is at least 35% excluding drug, blood, transfusion fluids, chemicals, and replacement materials), regular expense savings (excluding salaries and salary-like allowances) of at least 10%, and unspent salary reform funds from previous years (if any) transferred to the next year for continued implementation. Local budgets must use at least 50% of annual increased revenue to implement; for 2006, use at least 50% of the 2005 increased revenue and the 2006 budget revenue compared to the 2004 budget (excluding land use fees) to generate funds for salary reform. After using these sources, if there is still a shortfall, the central budget will support to ensure sufficient funding for salary reform according to regulations.

The central budget and local government budgets at all levels must allocate reserves according to the State Budget Law to proactively respond to natural disasters and handle urgent tasks outside the budget estimate.

Ministries, central agencies, localities, and budgetary units at all levels must anticipate all tasks that may arise during the budget year; based on this, they must allocate budgets to ensure the implementation of important assigned tasks and new emerging tasks; no situation should arise where additional requests are made outside the budget estimate during implementation. Additional funding from reserves will not be provided for expenditure tasks that were not adequately budgeted according to regulations when ministries, central agencies, and localities prepared and allocated their budgets.

2.4. Expenditure for national target programs and important projects:

- Ministries and agencies managing national target programs must cooperate with the Ministry of Planning and Investment and the Ministry of Finance to organize evaluations of the results of the 2001-2005 period; propose programs and projects to be terminated and converted into ongoing tasks, those needing continuation in the 2006-2010 period; clearly define specific goals and tasks for each year in program implementation; management mechanisms and policies for programs and projects to be submitted to the Prime Minister for decision.

- Based on the verified budget estimates for implementing national target programs, Program 135, and the Five Million Hectare Reforestation Project, ministries and agencies managing these programs and projects must plan budget allocations for these programs and projects for central agencies and localities.

- Central ministries and localities must prepare budget estimates for national target programs, Program 135, and the Five Million Hectare Reforestation Project according to the verified figures announced and guidance documents.

2.5. Ministries, central agencies, and localities must prepare detailed budget estimates for each task and each direct budget-using unit to ensure that when receiving the Prime Minister's budget allocation, they can distribute and assign it to budget-using units before December 31 in accordance with the State Budget Law.

3. Preparing the state budget to ensure balance in the state budget and local government budgets according to the State Budget Law and Directive No. 18/2005/CT-TTg dated May 31, 2005, of the Prime Minister:

- The budget estimate for tax and fee revenue of the state budget must cover regular expenditures, repay maturing debts, and salary reform expenses, with accumulation for development investment. The state budget deficit should not exceed 5% of GDP, consistent with domestic borrowing capacity and preferential foreign borrowing, without commercial foreign borrowing to offset the state budget deficit.

- Provinces and centrally-administered cities must prepare local budget expenditure estimates that do not exceed local budget revenue and the balanced supplementary amount (if any) from the central budget to the local budget at the stable level set by the Prime Minister for the locality in the 2005 budget estimate.

For provinces and centrally-administered cities requiring additional capital for increased development investment, they must prepare budget estimates in accordance with Clause 3, Article 8 of the State Budget Law, ensuring the total debt raised (including the expected raise in 2006) does not exceed 30% (for Hanoi and Ho Chi Minh City, 100%) of the provincial budget estimate for investment construction and development.

4. On preparing local government budgets:

4.1. On the basis of implementing the state budget for the year 2005 and the period 2001-2005, localities shall base on their economic and social development goals for the year 2006 and the period 2006-2010, and the contents of the state budget preparation guidelines provided in the above sections to organize the preparation of the local budget for the year 2006 and the period 2006-2010. At the same time, pay attention to the following main contents:

- Preparing the revenue budget for the state budget on the local territory: Based on forecasting economic growth for each industry, sector, economic entities, and new sources of revenue arising on the local territory, prepare the revenue budget for each sector and each type of revenue according to the prescribed regulations, the domestic revenue budget from tax and fee revenues (excluding oil revenue and land use fee revenue) for the period 2006-2010 to increase by at least an average of 12-14% per year; in 2006, it should increase by at least 12-14% compared to the estimated actual performance in 2005, based on evaluating the state budget revenue in 2005 increasing by at least 5% compared to the Prime Minister's assigned budget estimate.

- Preparing the expenditure budget for the local state budget: Based on the local state budget revenue entitlements according to the regulations for the fiscal year during the stabilization period 2004-2006 as guided by Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance; based on the local economic and social development tasks for the year 2006 and the period 2006-2010, current financial policies and expenditure standards; prepare the detailed expenditure budget for the year 2006 and the period 2006-2010 for each sector with reasonable expenditure needs, ensuring the priority order of tasks and the guidance at Point 2, Section II, Part B of this Circular, while implementing the following main contents:

+ Prioritize funding for the implementation of infrastructure construction tasks, focusing on investing in key projects and works of the locality; proactively allocate local state budget funds to achieve the goal of solidifying schools, eliminating three-shift classrooms, bamboo, reed, and thatched-roof classrooms, solidifying irrigation canals and rural roads; village craft infrastructure, tourism infrastructure; developing crop and livestock varieties; transforming the economic structure; promoting trade, expanding and seeking export markets; paying special attention to poverty reduction, job creation, and combating social evils,...

+ Allocate sufficient counterpart funds for ODA projects or project components implemented on the local territory under the responsibility of the locality as decided by the Prime Minister. Proactively calculate and allocate within the construction investment expenditure budget to settle all outstanding construction investment debts, debts of village budgets, and other debts.

+ Allocate the local state budget construction investment expenditure budget corresponding to land use fee revenues to invest in economic and social infrastructure projects.

+ Develop a plan to mobilize capital for local infrastructure investment, allocate the local state budget to ensure full repayment of due payments according to Clause 3, Article 8 of the State Budget Law.

+ Allocate funds to implement Central Resolution 2 (Session VIII) regarding education and training and science and technology sectors, and Resolution 41 of the Politburo regarding environmental protection tasks within the local state budget expenditure.

+ Allocate contingency reserves for the local state budget, supplementing the financial reserve fund according to the State Budget Law, to proactively respond to natural disasters, floods, epidemics, and urgent tasks at the local level.

+ Prepare the expenditure budget for implementing national target programs, Program 135, and the 5 million hectare forest planting project based on the objectives and tasks of the relevant ministries and management agencies, the local budget allocation capacity, and the announced support from the central government.

+ For infrastructure investment tasks according to Prime Minister's Decisions such as Decision No. 168/2001/QĐ-TTg dated October 30, 2001, Decision No. 186/2001/QĐ-TTg dated December 7, 2001, Decision No. 120/2003/QĐ-TTg dated June 11, 2003, and Decision No. 134/2004/QĐ-TTg dated July 20, 2004 of the Prime Minister,... based on the objectives, tasks, and investment capital needs already defined; based on the results achieved in 2005 and the period 2001-2005, localities shall prepare and calculate the tasks for 2006 and the period 2006-2010, actively arranging and allocating local state budget and financial resources according to the prescribed regulations to implement these tasks, proposing the level of central government support with explanatory notes on the calculation bases.

+ Prepare the expenditure budget for the local state budget for the year 2006 and the period 2006-2010, localities allocate sources to implement salary reform expenditures according to Point 2.3, Section II, Part B.

4.2. The local state budget for the year 2006 during the stable budget period (2004-2006) as stipulated by the State Budget Law, People's Committees at all levels shall proactively prepare their own local state budget estimates based on the revenue and expenditure assignments that have been stabilized; the local state budget estimates for 2006 are prepared based on: revenue determined based on the percentage (%) share of revenue items divided between different levels of the state budget, local state budget revenue entitled to 100% according to the State Budget Law, and the supplementary balance from higher-level state budgets to lower-level state budgets (if any) stabilized at the level of the 2005 budget estimate approved by the National Assembly, the Standing Committee of the National Assembly, the People's Council, the Prime Minister, and higher-level People's Committees.

C. IMPLEMENTATION ORGANIZATION:

1. Ministries and state agencies, according to their assigned functions and tasks, are responsible for preparing economic and social indicators in their respective fields and promptly notifying the Ministry of Finance, central ministries, and agencies, and localities before July 1, 2005, to serve as the basis for preparing the state budget for the year 2006 and the period 2006-2010.

2. The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance to prepare the budget for 2006 and forecast the funding for the period 2006-2010 for development investment expenditures, and the distribution plan for development investment expenditures in some sectors of the central budget assigned to be sent to the Ministry of Finance before September 10, 2005.

3. The ministries and central agencies managing national target programs, Program 135, and the project to plant five million hectares of new forests shall coordinate with the Ministry of Planning and Investment and the Ministry of Finance to assess the results of implementation during the period of 2001-2005, propose national target programs and mechanisms and policies for implementation during the period of 2006-2010, and submit them to the competent authority for decision-making. On this basis, they shall determine tasks and prepare the budget estimate for the year 2006 and forecast the budget estimates for the period of 2006-2010 for the programs and projects, and forecast the budget estimates for each ministry, central agency, and locality, and send them to the Ministry of Finance and the Ministry of Planning and Investment before July 30, 2005.

4. Ministries, central agencies, and People's Committees of provinces and centrally-administered cities shall base on this Circular and the figures on the state budget revenue and expenditure plan for the year 2006 and the period of 2006-2010 announced by the Ministry of Finance to guide and announce the figures on the revenue and expenditure budget plan for subordinate budget units and lower-level budgets.

Ministries, sectors, and localities shall base on the situation of revenue and expenditure implementation during the period of 2001-2005 and the development plan for the period of 2006-2010 to develop plans for revenue and expenditure of the state budget for the period of 2006-2010 for their respective sectors and fields under their management (including investment development expenses, regular expense areas; budget estimates for implementing assigned national target programs) together with the preparation of the 2006 state budget, and send them 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 shall organize the work of preparing, consolidating, and reporting the state budget estimate for the year 2006 and the period of 2006-2010 in accordance with the provisions of the State Budget Law, guiding documents, and the contents specified in this Circular; report fully according to the forms and tables prescribed in Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance and related forms and tables prescribed in this Circular; send to the Ministry of Finance before July 20, 2005 (for ministries and central agencies) and before July 25, 2005 (for provinces and centrally-administered cities).

5. The Ministry of Finance shall organize meetings to discuss the state budget estimate for the year 2006 and the period of 2006-2010 with the 91 General Corporations from the end of June 2005, and with ministries and central agencies from the end of July 2005 (specific meeting schedules will be notified later).

For localities, the state budget estimate for the year 2006 is the budget year during the stabilization period as stipulated in the State Budget Law. The Ministry of Finance shall conduct discussions with the People's Committees of provinces and centrally-administered cities regarding the state budget estimate for the year 2006 at their request. Localities requesting discussions on the state budget estimate for the year 2006 are requested to register their meeting schedules with the Ministry of Finance before July 25, 2005 (expected to complete discussions before September 1, 2005) to ensure sufficient time for consolidation and reporting to the Government and National Assembly agencies on the state budget estimate for the year 2006.

6. The General Department of Taxation and the General Department of Customs shall have the responsibility to provide detailed guidance on this Circular to subordinate units to implement the preparation, consolidation, and reporting of the state budget revenue estimate for the year 2006 and the period of 2006-2010 within their respective fields.

7. Regarding the forms for preparing and reporting the state budget estimate for the year 2006 and the period of 2006-2010:

- For ministries and central agencies, consolidate and report to the Ministry of Finance the state budget estimate according to the forms and deadlines specified in Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance and additional forms (form numbers 2b, 2c, 3b, 3c, 4) prescribed in this Circular.

- For localities: Consolidate and prepare the local budget estimate, report to the Ministry of Finance according to the forms (form numbers 01, 02, 06, 07, 10, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23 - Appendix No. 6) and deadlines specified in Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance and additional forms (form numbers 1, 2a, 3a, 5, 6a, 6b, 7a, 7b, 8a, 8b) prescribed in this Circular.

8. This Circular takes effect fifteen days after its publication in the Official Gazette.

During the process of preparing the state budget estimate for the period of 2006-2010, especially for the year 2006 when new policies and regulations are issued, the Ministry of Finance will issue supplementary guidance notices; in the organization of preparing the state budget estimate for the year 2006 and the period of 2006-2010, if there are any difficulties, ministries, central agencies, localities, and the 91 General Corporations are requested to reflect these issues to the Ministry of Finance for timely resolution./.