Circular No. 54/2008/TT-BTC guiding the preparation of the State budget estimate for 2009

 

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 54/2008/TT-BTC

DATE JUNE 20, 2008

GUIDELINES FOR THE PREPARATION OF THE STATE BUDGET ESTIMATE

FOR THE YEAR 2009

Implementing Directive No. 723/CT-TTg dated June 6, 2008 of the Prime Minister on the preparation of plans for economic and social development and the state budget estimate for 2009, the Ministry of Finance guides the evaluation of the implementation of the state budget tasks for 2008 and the preparation of the state budget estimate (NSNN) for 2009 as follows:

A. EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET TASKS IN 2008:

Based on the state budget tasks for 2008 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 2008 assigned by the Prime Minister, on the basis of the situation in the first six months of the year, ministries, central agencies, and localities need to continue to focus on implementing all measures according to Resolution No. 08/2007/QH12 of the National Assembly on the state budget estimate for 2008, Resolution No. 02/2008/NQ-CP dated January 9, 2008 of the Government on major measures to guide the implementation of the economic and social development plan and the state budget for 2008; Resolution No. 10/NQ-CP dated April 17, 2008 of the Government on measures to curb inflation, stabilize macroeconomic conditions, ensure social welfare, and achieve sustainable growth; Decision No. 390/QĐ-TTg dated April 17, 2008 of the Prime Minister on managing the investment construction plan and state budget expenditures for 2008 to serve the goal of curbing inflation; Circular No. 135/2007/TT-BTC dated November 23, 2007 of the Ministry of Finance guiding certain points on the organization and implementation of the state budget estimate for 2008; Circular No. 34/2008/TT-BTC dated April 23, 2008 of the Ministry of Finance on guiding the implementation of cost savings of 10% in regular state budget expenditures for 2008 to curb inflation.

Along with organizing the implementation of the state budget tasks for 2008, ministries, central agencies, People's Committees of provinces and centrally-administered cities organize the evaluation of the results of the implementation of the state budget tasks for 2008 as the basis for preparing the state budget estimate for 2009 according to the following main contents:

I. Evaluation of the implementation of state budget revenue tasks in 2008:

Based on the results of the first half-year budget revenue, evaluate the results of the state budget revenue for 2008 on the basis of implementing measures to strive to complete and exceed the state budget revenue estimate assigned; focusing on the following main issues:

- Evaluate and analyze factors influencing and affecting the results of state budget revenue in 2008 such as: new production and business capacity due to new investments, expanded investments, deepened investments; the conversion and restructuring of state-owned enterprises...; review and evaluate the results of revenue from domestic and foreign investment projects that have commenced operations and have completed their preferential periods; the results of achieving key product production and consumption targets; costs; selling prices; profits; the results of land financial plan tasks (land use fees, land auction revenues,...); real estate transaction activities; stock market activities,...

- Evaluate and analyze the impact of amendments and supplements to revenue systems, policies, and management mechanisms in 2008 on state budget revenue results; the impact of implementing anti-inflation measures by the Government, ministries, sectors, and localities on production and business plan implementation results of units within their jurisdictions and state budget revenue results.

- Evaluate the impact of policy management in export and import, including adjustments to taxes aimed at limiting trade deficits, exporting raw materials, and adjusting tax rates to implement commitments under WTO, CEPT/AFTA, ASEAN-China, ASEAN-South Korea,...

- Evaluate the results of cooperation among relevant levels and sectors in revenue management and the organization of inspection, control, recovery of overdue debts, prevention of revenue loss, smuggling, commercial fraud,...

- Evaluate the situation of overdue tax debts and their resolution in 2008: clearly identify the amount of tax debt carried over from 2007, the potential for new tax debt in 2008. Accurately compile and classify tax debts according to the prescribed criteria in the tax debt management process.

- Strive to increase state budget revenue compared to the estimate assigned by the Prime Minister, including domestic revenue (excluding oil revenue and land use fee revenue) increasing by at least 5%, and revenue from export and import activities according to actual export and import turnover.

- Evaluate the situation of value-added tax declarations and refunds; the amount of VAT refund generated in 2008; the amount refunded to businesses in 2008; the estimated amount of VAT refund for 2008 to be refunded in 2009;... analyzing the reasons for significant increases or decreases in VAT refunds compared to the previous year.

- Ministries, central agencies, and budget users evaluate the revenue situation in 2008 (total revenue, revenue submitted to the state budget, retained revenue according to regulations).

II. Evaluation of the implementation of state budget expenditure tasks in 2008:

1. For development investment tasks:

1.1. Evaluation of the allocation and implementation of construction investment capital in 2008:

- Evaluate the allocation and assignment of development investment construction capital (XDCB) budget estimates for 2008:

+ Evaluate the allocation of funds and assignment of development investment XDCB budget estimates to projects and works in 2008 (including state budget sources, lottery revenue, government bond revenue), especially for important and urgent projects requiring timely completion, projects completed in 2008; allocate funds to settle investment construction debts from the state budget, to repay temporarily borrowed funds according to regulations.

+ Evaluate the implementation of programs and projects using official development assistance (ODA) funds; ensuring counterpart funds for ODA projects according to commitments; disbursement progress of ODA funds and allocation of counterpart funds.

- Evaluate the results of implementing the restructuring and reallocation of the 2008 development investment plan pursuant to Decision 390/QĐ-TTg dated April 17, 2008 of the Prime Minister (including investment expenditures from state budget funds and government bonds).

- Evaluate the situation and results of implementing investment construction expenditures:

+ Evaluate the implementation of the 2008 investment construction plan according to the following contents: number of projects and works; allocated investment capital (including supplementary or reallocated plans within 2008); completed construction volume; construction volume completed and accepted for inspection; amount of payments made (including payments for completed construction volume); number of completed projects and works, including completed work items... (categorized into groups A, B, C).

+ Evaluate compliance with regulations on investment capital management: investment procedures; timeframes, progress, and final settlement of investment capital for construction projects and works in 2008; existing issues in current investment management mechanisms and policies.

+ Evaluate the allocation and implementation of investment capital from government bonds and other sources as prescribed.

+ Summarize and evaluate the situation and results of handling outstanding investment construction volumes; propose and recommend solutions to resolve outstanding debts completely.

+ Evaluate the effectiveness of 2008 and previous years' investment construction; analyze existing issues, causes, and corrective measures; focusing on evaluating and analyzing key national projects and works, projects funded by ODA, projects from government bonds, projects funded from land use fees, lottery revenues, etc.

1.2. Evaluate the results of implementing support development tasks in 2008:

- Situation of implementing preferential credit from the State, credit for poor households and social policy beneficiaries, student credit (activity results, loan balances, deposit interest rates, interest rate differential compensation amounts, etc.).

- Situation of implementing trade promotion, investment, and tourism support policies; support policies for public utility enterprises, etc.

- Situation of implementing support for production and business development; evaluate the operation and effectiveness of credit guarantee funds for small and medium-sized enterprises, local development investment support funds, etc.

- Situation of implementing national reserves in 2008; level of national reserves achieved by December 31, 2008; capability to respond to emergencies.

2. For regular expenditure tasks:

2.1. Evaluate the implementation of the state budget estimate for the first six months of 2008 and projected full-year 2008 (the deployment of budget allocation and assignment, budget drawdowns; adjustments and reductions in expenditures for unallocated funds for other programs and tasks;...) according to each task index assigned by the State to Ministries, central agencies, localities, and units in 2008. Evaluate the results of implementing important tasks, major programs, and projects of each Ministry, sector, locality, agency, and unit; difficulties and obstacles encountered and proposed measures to address them.

2.2. Report on the implementation of the 10% reduction in regular state budget expenditures pursuant to Decision 390/QĐ-TTg dated April 17, 2008 of the Prime Minister, Circular No. 34/2008/TT-BTC dated April 23, 2008 of the Ministry of Finance, and Decision No. 721/QĐ-BTC dated April 23, 2008 of the Minister of Finance.

2.3. Evaluate the results, difficulties, and obstacles arising from the implementation of mechanisms, policies, and expenditure systems in 2008 for the tasks of Ministries, central agencies, localities, and units. Pay particular attention to evaluating the results of implementing the following mechanisms and policies:

- Implementation of support systems for fishermen, the poor; health examination and treatment systems for the poor and near-poor in 2008; free health examinations and treatments for children under six years old; scholarship systems for boarding and semi-boarding ethnic minority students, scholarships for poor students in communes designated as special hardship areas under Decree 135, and social assistance policies for vulnerable groups;... as prescribed.

- Implementation of water resource fee exemption systems.

- Implementation of allowances for non-professional village-level cadres as stipulated in Government Decree No. 121/2003/NĐ-CP dated October 21, 2003 (evaluate the use of central budget support and local budget allocation to ensure implementation).

- Implementation of subsidy costs for postage, price subsidies, and provision of certain policy goods without charge in 2008 in localities; implementation of policies for providing certain types of newspapers and magazines without charge in ethnic minority and mountainous regions as prescribed in Decision No. 975/QĐ-TTg dated July 20, 2006 of the Prime Minister; support for creative literary and artistic works and press activities at the central level and local literary and artistic associations; support for high-quality local press works as prescribed in Decision No. 926/QĐ-TTg dated July 6, 2006 of the Prime Minister.

- Situation and results of implementing Decree No. 130/2005/NĐ-CP dated October 17, 2005 of the Government on self-management and responsibility mechanisms for staffing and administrative management expenses. Evaluate the organization and implementation of self-management and responsibility systems for task execution, organizational structures, staffing, and finance for public service units as prescribed in Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government and Decree No. 115/2005/NĐ-CP dated September 5, 2005 of the Government.

2.4. The Ministries and sector management agencies shall assess the implementation of Resolution No. 05/2005/NQ-CP dated April 18, 2005 and Decree No. 69/2008/NĐ-CP dated May 30, 2008 (replacing Decree No. 53/2006/NĐ-CP dated May 25, 2006 of the Government) on promoting socialization in educational, health, cultural, and sports activities within their respective sectors; paying particular attention to assessing and analyzing the total resources and resource structure invested by society for sector development, the results of mobilizing resources from society for sector development, existing issues, causes, and solutions to better mobilize resources from society for sector development in the future.

2.5. Administrative reform work in implementing the state budget estimate for 2008; clearly stating existing issues, causes, and solutions to address them. Assess the organization and implementation of funding allocation and payment, and the transition from cash disbursement orders to direct withdrawal from the State Treasury according to Circular No. 135/2007/TT-BTC dated November 23, 2007 of the Ministry of Finance guiding certain aspects of the implementation of the state budget estimate for 2008.

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

Assess the situation of allocating and assigning budgets for these programs and projects in 2008; based on the allocated budget and progress, the ministries and agencies in charge of the programs and projects and localities shall evaluate the volume of work completed in 2008, detailing each program and project; paying particular attention to assessing effectiveness, difficulties, and unreasonable aspects regarding the objectives, contents, and methods of implementing the programs and projects, and proposing adjustments and measures to overcome these issues in 2008 and 2009 to ensure the achievement of the goals and tasks of the programs and projects, and recommending improvements to the management mechanisms of the programs and projects.

For national target programs implemented with domestic and foreign funds, it is necessary to carefully assess the disbursement of foreign funds (advantages, difficulties, causes, and solutions to address them).

4. Assess the results of the salary reform system:

The results of reviewing and determining the financial needs for implementing the salary reform; the results of implementing financial measures to create sources for salary reform from: Saving 10% of regular expenses (excluding salaries and allowances); 35-40% of retained revenue according to regulations; 50% of increased local government revenues;... and identifying unused sources from previous years (if any) to continue creating sources for salary reform.

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

- Assessing the development needs and resources of the locality; the work of mobilizing financial resources at the local level to implement the economic and social development tasks of the locality; the results of implementing the National Assembly's resolution on preventing scattered investment; handling construction debt,...

- The results of implementing infrastructure investment tasks according to Decisions No. 24/2008/QĐ-TTg, No. 25/2008/QĐ-TTg, No. 26/2008/QĐ-TTg, and No. 27/2008/QĐ-TTg of the Prime Minister on issuing some mechanisms and policies to support economic and social development in the North Central Coast and Central Coast regions, the Central Highlands region, the Mekong Delta region, and the midland and mountainous northern region until 2010.

- The allocation of budget expenditures to implement state policies and programs aimed at economic and social development, poverty reduction (implementing poverty alleviation policies; national target programs on education, healthcare, culture, socio-economic development policies in difficult areas, ethnic minority and 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, medical examinations and treatments for the poor, children under six years old, policies supporting fishermen, assistance policies for social welfare beneficiaries;... in the locality.

- The allocation of the budget (including central government support funds for local budgets - if applicable) and the use of reserves to fulfill security and defense tasks; prevention, response, and mitigation of natural disasters, epidemics affecting livestock, poultry, and crops,...

- The implementation of policies exempting water resource fees in the locality; the implementation of exemptions from contributions according to Directive No. 24/2007/CT-TTg dated November 1, 2007 of the Prime Minister.

- The implementation of land use fee collection and allocation for local infrastructure projects, conducting land surveys, preparing land records, and issuing land use rights certificates.

- The implementation of lottery revenue collection and usage.

- The implementation of provisions in Clause 3, Article 8 of the State Budget Law on raising capital for infrastructure investment and the repayment of maturing borrowed funds, estimated outstanding debts raised up to December 31, 2008 (for Hanoi and Ho Chi Minh City, evaluate the raising of investment capital according to the special financial-budget mechanism of the locality).

- The arrangement for repaying (both principal and interest) overdue loans and advances: funds raised according to Clause 3, Article 8 of the State Budget Law; preferential credit loans for solidifying irrigation channels, rural transportation infrastructure, village industry infrastructure, and fisheries infrastructure; central government advances that must be recovered into the 2008 state budget estimate...

On the basis of the results of evaluating the implementation of the State Budget tasks in 2008, evaluating the implementation of tax and expenditure policies and other related policies; ministries, central agencies, and localities shall proactively propose specific amendments and supplements to tax and expenditure policies and other related policies; recommend guidance, direction, and organization of State Budget tasks for submission to the Ministry of Finance and relevant ministries and agencies for study, amendment, and supplementation or for timely submission to competent authorities for amendment and supplementation.

B. CONSTRUCTION OF THE STATE BUDGET ESTIMATE FOR 2009 AND PROJECTION FOR 2010:

I - Objectives, Principles:

- The State Budget estimate for 2009 must continue to effectively implement the measures proposed in 2008 to control inflation and stabilize the macro-economy. Accordingly, in 2009, the State Budget will continue to tighten expenditures; review and rearrange State Budget expenditures (including both recurrent and development expenditures) to thoroughly save and enhance the efficiency of State Budget expenditures, contributing to controlling inflation, stabilizing the macro-economy, promoting sustainable economic growth, ensuring social welfare, and maintaining national financial security.

- The State Budget revenue estimate for 2009 and projection for 2010 must be built on the basis of ensuring correct tax policies and systems decided by competent authorities; implementing the Law on Tax Administration well, preventing tax evasion and arrears. To build an active State Budget revenue estimate, it is necessary to analyze and forecast factors that may affect the implementation of the revenue estimate, such as economic growth and structural transformation, investment attraction prospects, increased production capacity, market fluctuations, domestic and international prices, the impact of Vietnam's economic and financial integration,...

- Regarding State Budget expenditures, the estimates for 2009 and projections for 2010 will continue to implement a tight fiscal policy, rearranging expenditures towards thrift and efficiency, contributing to controlling inflation and stabilizing the macro-economy; ensuring funds for social welfare policies and systems; ensuring funds for education-training, science-technology, culture, environmental protection according to Party and National Assembly resolutions, allocating more funds for health care at a higher rate than the average increase in State Budget expenditures; prioritizing budget reserves at high levels; increasing national reserves to proactively prevent, combat, and mitigate the consequences of natural disasters and epidemics; allocating funds to ensure continued salary reform.

- Achieve positive, healthy, and solid State Budget balance and local budgets; ensure national financial security and local budget safety.

II. Some Main Contents:

1. Work on Building the State Budget Revenue Estimate for 2009:

The State Budget revenue estimate must be built positively, firmly, with high feasibility, aiming to achieve over 22% of GDP, including tax and fee revenues reaching over 21% of GDP. The domestic revenue estimate (excluding oil revenue and land use fees) must increase by a minimum of 17-19% compared to the estimated actual performance in 2008 (the estimated actual performance in 2008 increased by a minimum of 5% compared to the State Budget revenue estimate for 2008 assigned by the Prime Minister). Specifically:

1.1. Domestic Revenue Estimate: Build the State Budget revenue estimate for each locality based on forecasts of economic growth in 2009 for each industry and revenue sector, and economic bases of each locality to accurately calculate each revenue sector and tax type according to tax laws and collection regulations. The revenue estimate for each province and centrally-administered city must comprehensively include all sources of revenue generated within their respective areas (including revenue from communes, wards, and towns). The revenue estimate must have economic foundations and details down to each industry, key units, and economic sectors. Based on this, fully evaluate the results of 2008; require efforts to achieve in 2009 and organize the construction and reporting of the 2009 revenue estimate according to the prescribed form in Circular No. 59/2003/TT-BTC dated June 23, 2003 issued by the Ministry of Finance and the provisions of this Circular. At the same time, pay attention to tax policies and systems that have been amended and supplemented, such as:

- Corporate Income Tax: Implement according to the provisions of the Corporate Income Tax Law (amended) approved by the 12th National Assembly, third session; Government Decree detailing the implementation of the Corporate Income Tax Law and guiding documents of the Ministry of Finance. When preparing this revenue estimate for 2009, note some important changes in policy compared to 2008, such as reducing the general tax rate from 28% to 25%; provisions on the allocation of taxes between the locality where the enterprise's headquarters is located and the locality where the enterprise conducts business operations; detailed provisions on non-deductible expenses when determining taxable income,...

- Value Added Tax: Implement according to the provisions of the Value Added Tax Law (amended) approved by the 12th National Assembly, third session; Government Decree detailing the implementation of the Value Added Tax Law and guiding documents of the Ministry of Finance.

- Personal Income Tax: Implement according to the provisions of the Personal Income Tax Law approved by the 12th National Assembly, second session; Government Decree detailing the implementation of the Personal Income Tax Law and guiding documents of the Ministry of Finance.

- Regarding water resource tax: Calculate and prepare the budget estimate according to the guidance provided in Decree No. 147/2006/NĐ-CP dated December 1, 2006 of the Government amending and supplementing certain articles of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government detailing the implementation of the Natural Resources Tax Ordinance (amended), Circular No. 42/2007/TT-BTC dated April 27, 2007 guiding the Ministry of Finance, Decision No. 16/2008/QĐ-BTC dated April 14, 2008 of the Minister of Finance adjusting tax rates in the natural resources tax schedule issued together with Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government detailing the implementation of the Natural Resources Tax Ordinance (amended), and Decree No. 147/2006/NĐ-CP dated December 1, 2006 of the Government amending and supplementing certain articles of Decree No. 68/1998/NĐ-CP of the Government.

- Regarding land use fee collection: Based on the land use planning and plan approved by the competent authority, forecast the progress of transferring land with land use fees, leasing land, auctioning land use rights, or tendering projects using land as stipulated by law; prepare the budget estimate for collecting land use fees when the State transfers land with land use fees through land use right auctions or without auctions according to Circular No. 70/2006/TT-BTC dated August 2, 2006 of the Ministry of Finance guiding amendments and supplements to Circular No. 117/2004/TT-BTC dated December 7, 2004 of the Ministry of Finance guiding the implementation of Decree No. 198/2004/NĐ-CP dated December 3, 2004 of the Government on land use fee collection; prepare the budget estimate for collecting land transfer fees when implementing the reorganization and handling of state-owned houses and land according to Decision No. 09/2007/QĐ-TTg dated January 19, 2007 of the Prime Minister.

- Regarding stamp duty: Calculate and prepare the budget estimate according to the provisions of the Government's Decree amending and supplementing certain articles of Decrees No. 176/1999/NĐ-CP and No. 47/2003/NĐ-CP of the Government on stamp duty and guiding documents of the Ministry of Finance.

- For other fee and stamp duty collections: Implement according to Decree No. 24/2006/NĐ-CP dated March 6, 2006 of the Government amending and supplementing certain articles of Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Fee and Stamp Duty Ordinance; Decree No. 63/2008/NĐ-CP dated May 13, 2008 of the Government and guiding documents on environmental protection fees for mineral extraction; Circular No. 88/2007/TT-BTC dated July 19, 2007 of the Ministry of Finance amending and supplementing Circular No. 37/2003/TT-BTC dated April 24, 2003 of the Ministry of Finance on the system of collection, payment, management, and use of passport issuance fees, visa fees, and documents related to entry, exit, transit, and residence in Vietnam; Decision No. 77/2007/QĐ-BTC dated August 31, 2007 of the Minister of Finance on the level of collection, system of collection, payment, management, and use of fees for processing visa exemption certificates for overseas Vietnamese; other relevant documents stipulating the system of collection, payment, management, and use of various fees and stamp duties.

1.2. Budget estimate from import and export activities:

- Is built based on assessing the impact on revenue through analysis and forecasting the global economic situation; domestic import demand to serve production and consumption; the impact of adjusting tariff and non-tariff barriers to curb trade deficits and limit the export of raw materials, and the implementation of the reduction of tariffs to fulfill integration commitments.

- The budget estimate must be prepared based on effectively managing revenue; strengthening measures to prevent revenue loss such as: debt settlement, anti-smuggling, tax evasion, and commercial fraud.

1.3. Revenue items retained for expenditure (tuition fees, medical fees, lottery revenues, contributions, etc.): Ministries, central agencies, and localities base their budget estimates on actual revenue collected in 2007, estimated revenue for 2008, and anticipated factors affecting revenue in 2009 to build appropriate and positive budget estimates.

2. Construction of the 2009 State Budget Expenditure Budget:

The State Budget Expenditure Budget needs to be constructed in a direction that continues to implement measures to save expenditures, improve the efficiency of investment capital from the budget to control inflation, stabilize macroeconomic conditions, ensure social welfare, and promote sustainable economic growth. Accordingly, ministries, sector management agencies at the central level, provincial People's Committees, and all levels of budget units prepare the 2009 budget expenditure within the scope of the 2009 budget expenditure check announced by the Ministry of Finance (for expenditures from foreign sources, prepare the budget expenditure according to the disbursement progress of loan and aid projects); construct the 2009 budget expenditure by sector (including both expenditures from the state budget balance and retained revenue). Among which:

2.1. Budget for development investment:

- Implement the development investment plan in a direction to continue implementing solutions to review, rearrange, and adjust investment capital according to Resolution No. 10/2008/NQ-CP dated April 17, 2008 of the Government and Decision No. 390/QĐ-TTg dated April 17, 2008 of the Prime Minister, aiming to enhance the effectiveness of capital use, contribute to controlling inflation, stabilizing macroeconomic conditions, and promoting economic growth. Priority should be given to national key projects, poverty reduction programs, ensuring social welfare; national priority investment targets; continue prioritizing investment development funding for human resource development in education, science and technology, health care, and people's health care,...

- Ensure sufficient counterpart funds for programs and projects using ODA funds according to commitments; guarantee funds for investment preparation work; allocate sufficient plans to repay the State budget for previously advanced amounts; settle outstanding debts for completed construction works, while strictly implementing to avoid new construction debts.

- Schedule progress for effective ongoing projects and works that can be completed and put into use in 2009, particularly key projects and works with high efficiency, urgent projects such as dike adjustment, water conservancy, rural transportation development, infrastructure for flood-prone areas, delayed flood areas, tourism infrastructure, craft village infrastructure, aquaculture infrastructure,...

- Minimize the initiation of new projects to the greatest extent possible. Firmly postpone the commencement of projects not included in approved plans, lacking necessary procedures as prescribed, having unresolved investment procedures issues, incomplete land clearance, and other non-urgent projects that do not yield significant benefits,...

- Investors of projects funded by government loans must arrange sufficient counterpart funds for these projects in accordance with the content of signed agreements and domestic financial regulations to ensure project implementation schedules are not affected.

- For subsidies to cover interest rate differences on development credit and state policy credit, base the budget estimates for 2009 on the actual situation in 2008, anticipated policy changes, and specific tasks for 2009, following established regulations.

- For supplementary national reserve expenditures: Based on the National Reserve Development Strategy, assigned national reserve tasks, and requirements to prevent and mitigate the consequences of natural disasters and epidemics, central ministries and agencies have the responsibility to assess and determine the level of national reserves managed by their departments, sectors, and units up to December 31, 2008; estimate the levels of supplementary reserves for essential goods, materials, and equipment; prepare the state budget estimates for increasing national reserves, preserving goods, and the plan for rotating national reserve goods in 2009.

- Central ministries and agencies, and localities assigned tasks for investment in construction from government bonds must prepare the 2009 budget estimates for transportation, water conservancy, health care system, school consolidation, and teachers' housing projects funded by government bonds according to established regulations. At the same time, they must focus on directing the implementation to ensure compliance with specified schedules and objectives.

2.2. Budget estimates for educational and training services, science and technology, healthcare, culture and society, sports, economic services, environmental protection services, national defense security assurance, administrative management of the state, the Party, mass organizations...:

- Prepare budget estimates in line with continuing to implement cost-saving measures as per Resolution No. 10/2008/NQ-CP dated April 17, 2008, of the Government and Decision No. 390/QĐ-TTg dated April 17, 2008, of the Prime Minister, aiming to enhance the effectiveness of budget usage, contribute to curbing inflation, and stabilizing macroeconomic conditions.

- Budget estimates for developing educational and training services, cultural activities, healthcare, environmental protection, science and technology, social services; ensuring national defense and security; administrative management expenses, party, and mass organization expenses... must be based on the 2009 economic and social development plans of each ministry, central agency, and locality, existing policies and regulations issued by competent authorities, and specific tasks to be implemented in 2009.

- Nationwide, allocate the state budget expenditure for education, training, and vocational training in 2009 (including development spending, regular spending, and salary reform spending) to reach 20% of total state budget spending (including lottery revenue); cultural information sector over 1.5%; science and technology sector 2%; environmental protection activities over 1%; increase spending on the healthcare sector at a higher rate than the average increase in state budget spending, prioritizing funding for preventive healthcare.

- Budget estimates for economic service construction are based on the volume of tasks assigned by competent authorities and the prescribed budget expenditure standards; focus on allocating funds for important tasks: maintenance and repair of critical economic infrastructure systems (transportation, water conservancy,...) to extend their usage time and investment efficiency; funding for planning work; implementing agricultural, forestry, fishery, and industrial promotion tasks; land administration services,... contributing to promoting growth and economic structure transformation.

- In 2009, central ministries and agencies must prepare budget estimates for information technology application expenditures in accordance with Decree No. 64/2007/NĐ-CP dated April 10, 2007, of the Government on the application of information technology in state agency operations and guidelines in Circular Joint No. 43/2008/TTLT-BTC-BTTTT dated May 26, 2008, of the Ministry of Finance and the Ministry of Information and Communications.

- For administrative state agencies operating under the mechanism of delegated authority and self-responsibility for staffing and administrative management expenses as stipulated in Decree No. 130/2005/NĐ-CP dated October 17, 2005, of the Government, aimed at enhancing autonomy linked to responsibility, improving financial management efficiency, and operational performance. Public service units shall operate in accordance with Decree No. 43/2006/NĐ-CP dated April 25, 2006, of the Government on the rights of public service units to autonomous operation and responsibility for task execution, organizational structure, staffing, and finance, and Decree No. 115/2005/NĐ-CP dated September 5, 2005, of the Government on the autonomous mechanism of public scientific and technological organizations; for public service units whose regular operating costs are partially or fully covered by the budget, the 2009 budget estimates will be prepared based on continued stability and adjustments according to the increase in budget spending in the sector or field.

Administrative state agencies and public service units with income as prescribed by law must prepare complete budget estimates for revenues and expenditures for tasks funded by fees, charges, and other retained income according to established regulations.

- For research and scientific development expenses, expenses to implement state tasks under contract, and other important expense tasks, units shall prepare budget estimates according to current regulations and guidance provided in this Circular, while providing detailed explanations for all calculation bases.

- Budget estimates for implementing policies of free distribution of certain types of newspapers and magazines to ethnic minority areas and mountainous regions, budget estimates for supporting the creation of cultural and artistic works, press works, and high-quality local press works shall be carried out in accordance with the Prime Minister's decision. Subsidies for publication prices, subsidies, transportation fees, etc., shall be implemented according to the current system. Ministries, central agencies, localities, and units need to calculate subsidies based on determining quantities, production costs, transportation costs, and specific subsidy rates for each item according to prescribed regulations.

2.3. For programs and projects using ODA funds, full budget estimates must be prepared strictly in accordance with the procedures, forms, and decisions on the State Budget as stipulated by the State Budget Law and guiding documents, Decrees of the Government on investment management and basic construction, on ODA fund management and usage, and Joint Circular No. 02/2003/TTLT-BKH-BTC dated March 17, 2003 issued by the Ministry of Planning and Investment and the Ministry of Finance, and Circular No. 108/2007/TT-BTC dated September 7, 2007 issued by the Ministry of Finance guiding financial management mechanisms for official development assistance (ODA) programs and projects; specifically detailing ODA and counterpart funds for each program and project, according to the nature of investment and public service expenditure sources, ensuring alignment with implementation schedules; submitting to the Ministry of Planning and Investment and the Ministry of Finance as required for consolidation in the 2009 State Budget draft to be decided by the Government and the National Assembly.

2.4. Continue to allocate budget estimates and mobilize financial resources to implement salary reform. Ministries, sectors, central agencies, localities, and state budget-using units should proactively calculate and reserve funds to implement salary reform in the direction of saving 10% of regular expenditures in 2009 (excluding salaries and salary-like allowances); using at least 40% of retained income according to the 2009 regime of administrative agencies and revenue-generating public institutions, while health sector public institutions use at least 35% of retained income (after deducting drug, blood, transfusion fluid, chemical, and consumable material costs); local budgets should use at least 50% of the increase in local budget revenues forecasted for 2009 compared to the 2008 estimate and 50% of the actual increase in local budget revenues achieved in 2008 compared to the 2008 estimate assigned by the Prime Minister; simultaneously transferring unutilized salary reform funds from previous years (if any) to 2009 for continued implementation; all such funds must be separately accounted for and managed to create resources for ongoing salary reform, not to be used for other purposes. The Ministry of Finance will issue separate guidelines for calculating and determining the funds reserved for implementing salary reform.

2.5. Central and local government budgets at all levels should allocate higher budget reserves as prescribed by the State Budget Law to proactively prevent, combat, and mitigate the consequences of natural disasters, epidemics, and handle urgent tasks outside the budget estimate.

During the process of preparing the 2009 budget, ministries, central agencies, localities, and budgetary units at all levels are responsible for proactively forecasting the full needs for expenditures to implement new policies, systems, and tasks (if any) that may arise in 2009, particularly those related to social welfare; based on this, they should arrange budget estimates to ensure the implementation of assigned important tasks and newly arising tasks; there should be no situation where after the budget has been allocated by the competent authority, there is insufficient funding to implement established policies and new tasks. Supplementary funds from the reserve shall not be provided for tasks whose budget estimates were inadequately funded by ministries, central agencies, and localities when preparing their budgets according to prescribed regulations.

2.6. Expenditures for national target programs and important projects:

Based on the goals, tasks, and contents of national target programs and important projects for the period 2006-2010 approved by the Prime Minister, relevant ministries and agencies managing these programs and projects shall evaluate the implementation results for the three-year period 2006-2008, determine specific annual targets and tasks, and set specific targets and tasks for 2009; based on the current financial system, prepare budget estimates for national target programs, Program 135 (Phase II), and the 5 million hectare forest planting project in 2009 and 2010, propose budget allocation plans for these programs and projects in 2009 for central ministries and agencies and localities (for programs and projects implemented with both domestic and foreign funds, detailed allocation plans for domestic and foreign funds are required), and submit them to the Ministry of Planning and Investment and the Ministry of Finance.

2.7. Based on the budget estimates of retained revenue items (tuition fees, medical fees, lottery proceeds, contributions collected,...): Ministries, central agencies, and localities shall prepare budget estimates from these revenues, detailing each expenditure task and field, and consolidate them into the budget estimates of ministries, central agencies, and localities for submission to the competent authority for decision.

2.8. The Ministries and central agencies shall prepare budgets for expenditures according to implementing units and important tasks (including detailed explanations on the basis, policies, implementation results, budget allocation levels for 2009 and subsequent years,...) and submit them to the Ministry of Finance and the Ministry of Planning and Investment for consolidation and reporting to the Prime Minister. The Ministries, central agencies, and localities shall proactively prepare clear and detailed reports explaining their budget revenues and expenditures for 2009 according to prescribed regulations.

2.9. Based on the verification of budget revenues and expenditures in 2009, the Ministries, central agencies, and localities must develop detailed budgets for each task and each subordinate budget-using unit; after working and reaching consensus with the Ministry of Finance and the Ministry of Planning and Investment, the Ministries, central agencies, and centrally-administered provinces shall immediately implement the work of preparing plans to allocate the 2009 budget of their respective ministries, agencies, and localities, ensuring that when they receive the Prime Minister's assigned budget, they can promptly submit it to the competent authority for decision-making and allocation to budget-using units before December 31 in accordance with the provisions of the State Budget Law.

The Ministries, central agencies, and localities must focus on directing the review of all stages in the process of budget allocation, management, and utilization, especially investment capital and loan aid funds, to ensure that budget allocations meet objectives, comply with regulations, and target the right recipients; budget management and utilization must be strict and effective, with reporting, inspection, and auditing systems in place to prevent losses and waste.

3. On building local government budgets:

3.1. On building local government revenue budgets:

Based on the socio-economic development goals for the 2006-2010 period approved by Party Congresses at all levels, the ability to achieve economic and social targets and state budget targets in 2008, and forecasts of economic growth rates and revenue sources for 2009 for each sector and field, each locality's economic entities, and new revenue sources arising within the locality, calculate accurately and comprehensively each revenue area and item according to regulations; the local domestic revenue budget from tax and fee sources (excluding oil revenue and land use fees) for 2009 should increase by a minimum of 17-19% compared to the estimated actual performance in 2008 based on the assessment that the state budget revenue in 2008 increased by a minimum of 5% over the Prime Minister's assigned budget (excluding oil revenue and land use fees), and the budget revenue from import-export activities should increase by a minimum of 5-7% compared to the estimated actual performance in 2008.

3.2. On building local government expenditure budgets:

In the 2007-2010 stable budget period as stipulated by the State Budget Law, People's Committees at all levels shall proactively build their local government budgets for 2009 based on the revenue sources and expenditure tasks that have been stably decentralized; the 2009 local government budgets at all levels shall be built based on: revenue sources determined according to the percentage (%) distribution of shared revenue between budget levels, local government budget revenue receiving 100% according to the State Budget Law, and supplementary balancing funds from higher-level budgets to lower-level budgets (if any) stabilized at the level of the 2007 budget decided by the National Assembly, the Standing Committee of the National Assembly, the Higher-level People's Councils, and assigned by the Prime Minister and higher-level People's Committees.

Based on the socio-economic development tasks of the locality in 2009 and the 2006-2010 period, current policies and expenditure standards; build the 2009 local government expenditure budget and estimate the 2010 budget specifically by field, ensuring the priority order of tasks and the guidelines set out in Point 2, Section II, Part B of this Circular, while implementing the following main contents:

- Continue to review and classify projects to establish a priority order for budget allocation, paying particular attention to allocating budgets for infrastructure construction projects, key projects and works of the locality that are effective and capable of being completed and put into use in 2009 (transportation, water conservancy, works serving economic structure transformation, works to address natural disaster consequences...); proactively allocate local government budgets to implement solidification of irrigation channels and rural roads; village industry infrastructure; focus on implementing poverty reduction, job creation, and social evil prevention tasks; allocate sufficient counterpart funds for ODA projects according to the requirement that localities must allocate from their own budgets; reserve funds in the construction investment budget to settle outstanding construction debts and repay maturing debts.

- Allocate budgets for infrastructure construction projects and relocation and resettlement projects, and land clearance for construction of the locality corresponding to the surplus land use fees from 2009 and previous years carried forward (if any) in accordance with prescribed regulations.

- Develop plans to mobilize investment capital for infrastructure in the locality, ensuring that the local government budget guarantees full repayment of due amounts (both principal and interest) according to Clause 3, Article 8 of the State Budget Law.

- Prepare the expenditure budget for investment from government bonds for transportation, water conservancy works, health facilities (as per Resolution No. 18/2008/QH12 dated June 3, 2008 of the National Assembly), solidifying school buildings and constructing teachers' housing according to approved programs; among which, proactively allocate local government budget resources (lottery proceeds, investment spending in local budget balance) to implement investments in the programs for solidifying school buildings and constructing teachers' housing as decided by the Prime Minister.

- For investment infrastructure tasks pursuant to Decisions No. 24/2008/QĐ-TTg, No. 25/2008/QĐ-TTg, No. 26/2008/QĐ-TTg, and No. 27/2008/QĐ-TTg of the Prime Minister on issuing certain mechanisms and policies to support economic and social development in the North Central Coast and Central Coast regions, the Central Highlands region, the Mekong Delta region, and the midland and mountainous areas of Northern Vietnam until 2010, and other decisions, based on the objectives, tasks, and capital investment needs as prescribed; based on the results of investment up to the end of 2007, the ability to implement in 2008, localities shall establish and calculate the tasks for 2009, proactively arranging and allocating local budgets and financial resources according to the prescribed regulations to carry out these tasks, and propose the level of central budget support with detailed explanations of the calculation bases.

- Allocate funds to implement Resolution No. 37/2004/QH11 dated December 3, 2004 of the National Assembly on education, Resolution No. 2 of the Central Committee (8th term) concerning science and technology, and Resolution No. 41-NQ/TW dated November 15, 2004 of the Politburo concerning environmental protection tasks within the local budget expenditure.

- Prepare the budget estimate for implementing social security tasks (social assistance, student scholarship systems, exemption from water resource fees,...), where localities proactively arrange their own local budget sources and the need for support from the central budget.

- Localities shall prepare the budget expenditure plan for 2009, proactively calculate and allocate sources to implement salary reform expenditures as guided in Point 2.4, Section II, Part B of this Circular.

- Allocate local budget reserves at a high level; supplement the financial reserve fund in accordance with the State Budget Law to proactively respond to natural disasters, floods, epidemics, and urgent tasks at the local level.

- The People's Committee of Hanoi City and related localities shall implement the preparation of the 2009 budget estimate based on Resolution No. 15/2008/QH12 dated May 29, 2008 of the National Assembly on adjusting the administrative boundaries of Hanoi City and some related provinces. The Ministry of Finance shall issue additional guidance on adjusting the budget estimates of Hanoi City and related localities.

3.3. On the balance of local government budgets:

- Provinces and centrally governed cities shall prepare the local budget expenditure plan without exceeding the local budget revenue sources they enjoy and the supplementary balance (if any) from the central budget to the local budget at a stable level as set forth in the 2007 budget estimate assigned by the Prime Minister to the locality.

- For provinces and centrally governed cities that have the need to mobilize additional capital to increase development investment, they must prepare the budget estimate in accordance with Clause 3, Article 8 of the State Budget Law, ensuring that the level of mobilized debt (including the amount expected to be mobilized in 2009) does not exceed 30% (for Hanoi City and Ho Chi Minh City, it is 100%) of the budget estimate for construction investment expenditures of the provincial budget; at the same time, they must allocate sources to repay maturing amounts (both principal and interest).

4. Pilot work on building medium-term financial plans and medium-term expenditure plans:

Ministries and localities assigned to pilot the establishment of medium-term financial plans and medium-term expenditure plans under Decision No. 432/QĐ-TTg dated April 21, 2003 of the Prime Minister (Ministries of Planning and Investment, Finance, Transport, Agriculture and Rural Development, Education and Training, Health; localities of Hanoi, Binh Duong, Vinh Long) shall implement the preparation of medium-term financial plans and medium-term expenditure plans for the period 2009-2011 along with the preparation of the 2009 budget estimate. The Ministry of Finance shall provide specific guidance on the content, procedures, timelines, and responsibilities of ministries and localities in preparing medium-term financial plans and medium-term expenditure plans.

C. IMPLEMENTATION:

1. Based on the implementation of revenue and expenditure of the state budget in 2007 and 2008, the development plan for the 2006-2010 period, and the announced inspection figures, ministries, central agencies, and People's Committees of centrally governed provinces and cities shall guide and announce inspection figures for the budget revenue and expenditure estimates for subordinate budget units and lower-level budgets in accordance with regulations.

2. Ministries, central agencies, and localities shall organize the work of preparing the 2009 budget estimate and preliminary estimate for 2010 in accordance with the provisions of the State Budget Law, guiding documents, and the contents specified in this Circular; report fully the content and forms as stipulated in Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance and relevant forms prescribed in this Circular (for ministries and localities piloting the preparation of medium-term financial plans and medium-term expenditure plans, they shall follow the guidance documents issued by the Ministry of Finance); submit to the Ministry of Finance and the State Audit Office before July 20, 2008 for ministries and central agencies, and before July 25, 2008 for centrally governed provinces and cities.

3. Ministries and central agencies managing national target programs, Program 135 (Phase II), and the project to plant five million hectares of new forests, trade promotion programs, investment, tourism,... shall coordinate with the Ministry of Planning and Investment, the Ministry of Finance, and related ministries, central agencies, and localities to organize the preparation of program content until 2010; forecast the tasks and funding levels for implementing the programs in 2009 and 2010 and send them to the Ministry of Planning and Investment and the Ministry of Finance before July 20, 2008; prepare allocation plans for the 2009 budget expenditure for each ministry, central agency, and each centrally governed province and city and send them to the Ministry of Finance and the Ministry of Planning and Investment before July 30, 2008. At the same time, they shall proactively develop and promulgate guiding documents within their authority to complete in 2008 as a basis for organizing the implementation of programs and projects in accordance with regulations.

4. The Ministry of Finance shall take the lead and coordinate with the Ministry of Planning and Investment to organize meetings for discussion on the 2009 state budget estimate and the 2010 preliminary estimate with economic groups and state-owned corporations from the end of June 2008; with ministries, central agencies, and management agencies of national target programs, Program 135 (Phase II), and the project to plant five million hectares of new forests (operational expenses) in July 2008.

As for localities, the 2009 state budget estimate is within the stabilization period according to the State Budget Law. The Ministry of Finance shall conduct meetings with provincial People's Committees and centrally-administered city People's Committees upon their request to discuss the 2009 state budget estimate. Localities that require meetings on the 2009 state budget estimate are requested to register their schedules with the Ministry of Finance before July 25, 2008, to arrange the meetings (expected to be completed before September 1, 2008), ensuring sufficient time for consolidation, reporting to the Government and National Assembly agencies on the 2009 state budget estimate.

5. The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance to prepare the 2009 investment expenditure budget and the allocation plan for certain sectors of the central budget, which shall be submitted to the Ministry of Finance before September 10, 2008.

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 for the purpose of preparing, consolidating, and reporting the 2009 state revenue budget estimate and the 2009-2010 period estimate within their assigned areas; they shall proactively organize meetings with provincial and centrally-administered city tax bureaus and customs offices regarding the 2009 state revenue budget estimate and the 2009-2010 period estimate as prescribed.

7. Regarding the forms for preparing and reporting the 2009 state budget estimate and the 2010 preliminary estimate:

- 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, issued by the Ministry of Finance, additional forms (Form Nos. 2 and 4) stipulated in this Circular, and forms specified in Joint Circular No. 03/2006/TTLT-BTC-BNV dated January 17, 2006, issued by the Ministry of Finance and the Ministry of Home Affairs guiding the implementation of Decree No. 130/2005/NĐ-CP dated October 17, 2005, issued by the Government, and Circular No. 71/2006/TT-BTC dated August 9, 2006, issued by the Ministry of Finance guiding the implementation of Decree No. 43/2006/NĐ-CP; pay particular attention to preparing detailed budget estimates down to each budget user unit (according to Form No. 02 - Appendix No. 2 - Circular No. 59/2003/TT-BTC) and important tasks of ministries and agencies to explain and report to the National Assembly on the budget estimates of each ministry and agency; after the Prime Minister allocates the 2009 state budget, it shall be distributed and allocated to budget user units before December 31, 2008, in accordance with the State Budget Law.

- For localities: Consolidate and prepare the local budget estimate, report to the Ministry of Finance according to the specified forms (Form Nos. 01, 02, 06, 07, 10, 12, 13, 14, 16, 17, 18, 19, 20, 21, 22, 23 - Appendix No. 6) and deadlines set forth in Circular No. 59/2003/TT-BTC dated June 23, 2003, issued by the Ministry of Finance, and additional forms (Form Nos. 1, 3, 5, 6, 7, 8, 9, 10) stipulated in this Circular.

This Circular shall take effect fifteen days after its publication in the Official Gazette.

During the process of preparing the 2009 state budget estimate and the 2010 preliminary estimate, especially the 2009 estimate when new policies and regulations are implemented, the Ministry of Finance will issue supplementary guidance notices; in the organization of work to prepare the 2009 state budget estimate and the 2010 preliminary estimate, if there are any difficulties, ministries, central agencies, localities, economic groups, and state-owned corporations are requested to reflect them to the Ministry of Finance for prompt resolution./.