PUBLISHED REPORT
The State Budget Final Accounts for Fiscal Year 2019
The State budget plan for fiscal year 2019 was enacted by the National Assembly, with the total revenue of VND 1,411,300 billion; total expenditure VND 1,633,300 billion; and the State budget deficit VND 222,000 billion, equivalent to 3.6% of GDP, in which the central government budget deficit is VND 209,500 billion, while sub-national government budget deficit is VND 12,500 billion.
The year 2019 unraveled with complicated global developments and many disadvantages. The world economy showed signs of slowing down. On the domestic side, a number of challenges and disadvantages were unveiled in the economy, compounded with natural disasters, the climate change, and epidemics, significantly impacting production and living conditions, and eventually the State budget revenue and expenditure. Armed with the utmost determination for successful achievement of the financial - State budget mandates in fiscal year 2019 as enacted by the National Assembly, the Government embarked on consistent and decisive actions for the implementation of the targets, mandates and measures; to robustly roll out financial and tax policies and mechanisms, to reform the business environment in an effort to facilitate stable and resilient business development, to attract investments, to generate new productive capacity, so as to promote economic growth to drive up State budget revenues.
With such efforts and attempts of the whole political system, business communities and citizens nationwide; the socio-economic development mandates were successfully delivered across the board, achieving 12/12 targets enacted by the National Assembly. Economic (GDP) growth reached 7.02% (compared to the planning target of 6.6% - 6.8%), the macroeconomic conditions were stable, with major variables of the economic framework well maintained, inflation under control at 2.79% (compared to the planning target of 4%); which all positively impacted the State budget revenue and expenditure outturns in 2019.
1. The State budget revenue
The State budget revenue outturn was VND 1,553,612 billion, which was VND 142,312 billion higher (+10.1%) than the budget target, mainly thanks to over-realization of land and building related revenues, other budgetary revenues, net trade revenues and oil revenues, as particularly set out below:
a) Domestic revenue: The actual outturn was VND 1,277,988 billion, which was VND 104,488 billion higher (+8.9%) than the budget target, which was mainly attributed to the increase of land and building related revenues (VND 78,181 billion), the increase in distributed dividends and after tax income, and operational gains of the State Bank of Vietnam (VND 24,835 billion). In 2019, the composition of domestic revenues continued to undergo changes to be more sustainable, the share of domestic revenue has expanded in comparison with the previous years (80.0% of the total State budget revenue in 2016, 80.3% in 2017, 80.7% in 2018 and 82.2% in 2019), which gets closer to the target set out for the whole period 2016-2020 (84-85%). However, the revenue collections from all 03 sectors underachieved the budget targets (92.9% from the State-owned sector; 99.3% from the foreign-owned sector and 98.6% of the domestic private sector) for the following reasons (i) several industries that are major contributors to the State budget revenues, such as oil drilling, domestic automobile manufacturing, mobile phone part production,... expanded slower than expected or contracted in comparison to the previous years; (ii) the number of newly incorporated enterprises increased but most of them were medium, small or micro enterprises that were tax relieved accordance with law, their tax payments were not contributing as much to the State budget as expected in the budget plan; and (iii) a high number of enterprises had to suspend or terminate or dissolve their business operations...
The tax authorities already introduced consistent and decisive measures in revenue collections and combats against revenue evasion; while strengthening tax accounting and tax return-filing, strictly controlling the value added tax refunding to ensure well targeting and compliance with laws and policies of the State, facilitating taxpayers; reinforcing tax audit, inspection, tax enforcement, collection of tax arrears to raise revenues for the State budget in parallel to accelerating administrative procedure reforms, facilitating businesses and taxpayers, strengthening communication, dialogues, resolution of complaints, supporting taxpayers; while embracing information technology application in tax administration in response to the new requirements of reforms in tax policies, refinement of tax administration processes, particularly in response to the urgent requirements for tax administrative procedure reforms. In 2019, the tax authorities conducted 96,243 inspection and audit missions, achieved 109.72% of the planning target, increasing State budget revenue collection by VND 18,876 billion; and reviewed 517,554 tax returns in their offices.
b) Oil revenue: The actual outturn was VND 56,251 billion, increasing by 26.1% (VND 11,651 billion) against the budget target, thanks to the average oil prices payable at USD 67.5 per barrel, which was USD 2.5 per barrel higher than the budgeted price (USD 65 per barrel); and the sold volume of 1.04 million tons, which was 0.61 million tons higher than the budget target.
c) Net trade revenue: the actual outturn was VND 214,239 billion, increasing by 13.2% (VND 25,039 billion) against the budget target. In 2019, several products that have high tariff applied, hence yielding significantly higher revenues, such as coal, completely built-up automobiles, machinery, equipment, computers and parts, electronics and parts, automobile parts..., resulting in the fact that import and export values increased by 7.7% from that in 2018; moreover, tax arrears were reduced from the previous years, thanks to reinforced tax inspection, audits and enforcement, which all contributed to higher State budget revenues. The actual value added tax refunding was VND 133,043 billion, increasing by VND 21,743 billion from the budget targets, in compliance with the Value Added Tax Law.
d) External Grants: The actual outturn was VND 5,133 billion, increasing by VND 1,133 billion (+28.3%) against the budget target.
2. The State budget expenditure
Following up the National Assembly's Resolutions, the Government proactively and energetically introduced many consistent and decisive measures in its arrangements for the implementation of the financial - State budget mandates in fiscal year 2019. The State budget expenditure execution outcomes are set out below:
The State budget expenditure outturn was VND 1,526,893 billion, which was VND 106,407 billion lower than, or equivalent to 93.5% of the budget target, mainly because of slow execution of several expenditures, resulting in the budgets being cancelled or carried forward to the following year in accordance with the State Budget law. Ministries, central government agencies and sub-national governments executed their budgets close to the authorized fiscal target, in contribution to the assurance of macroeconomic stability and delivery of social protection policies.
Below are State budget expenditure outturns by economic nature:
a) Development capital expenditure: The actual outturn was VND 421,845 billion, equivalent to 97.8% of the budget target, accounting for 27.6% of the total State budget expenditure.
b) Interest: The actual outturn was VND 107,065 billion, equivalent to 85.7% of the budget target, mainly because of coupon payments for outstanding Government bonds and the average interest payable in 2019 were lower than the targets.
c) Recurrent expenditure (including expenditures earmarked for salary reforms): The actual outturn was VND 994,582 billion, equivalent to 95.6% of the budget target.
The State budget execution during the year was active and strictly compliant with policies and entitlements, closely following the authorized budget targets, resulting in strengthened fiscal discipline and improved effectiveness in the use of the State budget. The Government made available fiscal resources for timely response to critical mandates, recovery from natural disasters and epidemics, delivery of social protection policies and entitlements as stipulated in laws and regulations.
In addition, critical recurrent expenditure functions such as science and technology, education and training, social protection, continued to be prioritized in budget allocation for the delivery of such important mandates, in combination with active reforms and strengthening of the regime of autonomy and self-responsibility in the organizational structure and financial management of public service delivery units in line with the roadmap for full-cost service pricing following the spirit of the National Assembly's Resolution.
3. The State budget deficit
The State budget deficit outturn was VND 161,491 billion, equivalent to 2.67% of GDP1, which was VND 60,509 billion lower than the target voted by the National Assembly; in which, the sub-national government budget did not run deficit, with the budget balance turned out to be VND 12,500 billion lower than the target; the central government budget deficit outturn was VND 161,491 billion, which was VND 48,009 billion lower than the target set out by the National Assembly.
4. Total State budget debt borrowing
The total debt to be borrowed for the State budget was VND 425,252 billion as voted by the National Assembly; the actual outturn was VND 345,311 billion, which was VND 79,941 billion lower, or equivalent to 81.2% of the budget targets, mainly thanks to the decline of the State budget deficit by VND 60,509 billion.
*1 GDP not yet revised: VND 6,037,348 billion.
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