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Viet Nam must be more thrifty in making spending decisions

Update: October, 30/2014 - 08:52

Phung Quoc Hien, chairman of the National Committee for Financial and Budgetary Affairs, told Hai quan (Customs) newspaper that Viet Nam's spending structure was ‘irrational'.

Recurrent spending accounts for 70 per cent of the country's total budget. What's your assessment of this?

The spending structure for the State Budget in 2013 was totally irrational. Investment spending installment was reduced considerably compared to several years. It was much lower than the approved figure. Recurrent spending in 2014 increased to 67-70 per cent from 60 per cent in 2011-2012.

The main reason for the recurrent spending hike was the money mainly borrowed to feed our people. However, budget spent on social security was much lower than demand.

What's your position about the fact that development investment capital at present depends mainly on Official Development Assistance (ODA) funds?

I have to concede we are starting to have policy debts, including a debt to build houses for people who have aided our revolutionary services, and debts relating to health care and education. From our revenue, most is reserved to pay for our national debts, particularly ODA.

It is high time for us to recalculate and balance the national budget to our financial capacity. Other factors that make our revenue smaller, include the extension and even reduction in tax payments. For example, at present enterprise tax has been reduced to 20 per cent from 32 per cent.

Viet Nam has the lowest value-added tax in the region. Of course, tax reductions are a way to nurture more revenue in the long run. But it causes difficulty in the short term for State revenue. We cannot consider tax collection as a "magic wand". But if the tax is reduced considerably, we'll loose a leverage and management tool.

If thrift is well practised, for example 10 per cent in the current spending, can we use the sum to increase salaries for public servants as was done in past years?

In reality, we have cut down on our recurrent spending by 10 per cent. This will allow us to set aside VND6 trillion ($286 million). But we need up to VND40 trillion ($1.9 billion) to increase each person's wages by VND100,000 ($4.7).

How do you respond to the 2012 State Budget report by the State Audit of Viet Nam asking for the reimbursement of VND648 billion ($30.8 million) in 34 localities nationwide?

The figure of $30.8 million is huge while we often talk about the need for financial discipline. I hope with the enforcement of the 2013 Constitution, it will not be so easy to spend money from the State budget as in the past. Payments must be approved by authorised agencies in accordance with budgetary plans.

Do you think it is feasible to cut down recurrent spending by 50 per cent by 2020 as proposed by your committee?

I think it is feasible if we strictly practice thrift! — VNS

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