Vietnam says 2020 fiscal deficits below 4% of GDP, public debt under control

Many flexible fiscal policy solutions, including exemption, reduction and extension of taxes, charges, fees and land rentals, were implemented in 2020 to remove obstacles for production and business, thus promptly supporting businesses and household businesses to overcome the difficulties caused by the COVID-19 pandemic, according to a report by the Ministry of Finance.

As of December 31, 2020, approximately VND123.6 trillion ($5.35 billion) worth of taxes, charges, fees and land rentals have been extended, exempted or reduced.

The country’s State budget revenue in 2020 met 98% of the estimate and rose by VND184 trillion ($7.97 billion) compared to the assessment at the National Assembly in October 2020. The mobilization ratio from GDP to the state budget reached 23.9 percent.

Regarding the 2016-2020 period, the total state budget revenue hit VND6.89 quadrillion ($298.67 billion), exceeding the set plan. This is a very positive figure in the context of challenges posed by the COVID-19 pandemic.

The structure of state budget revenue has been more sustainable, with the proportion of domestic revenue increasing from an average of 68 percent in the period of 2011-2015 to 85.5 percent in 2020, and the proportion of crude oil revenue and balancing revenue from import-export activities reducing from 30 percent on average during 2011-2015 to about 14.2 percent last year.

In 2021m the financial sector expects to collect over VND1.343 quadrillion ($58.4 billion) for the State budget, equivalent to 15.5 percent of the country’s gross domestic product, said the Ministry of Finance.

The proportion of domestic revenues and revenues from crude oil and import-export activities are expected to account for 84.4 percent, 1.7 percent and 13.3 percent of the total, respectively.

Meanwhile, the year’s budget spending is forecast to reach VND1.687 quadrillion, 60.1 trillion lower than the estimate in 2020.

In the 2021-2023 period, the sector aims to collect VND4.33 quadrillion ($187.6 billion) for the State budget, equivalent to 15.5 percent of the GDP.

2021 budget overspending to reach 3.8% of GDP

Budget spending is expected to stand at VND5.4 quadrillion, while State budget overspending is equivalent to 3.8 percent of the GDP. Public debt will be equivalent to 48.1 percent of the GDP by 2023.

The ministry said serious impacts from the COVID-19 pandemic has caused challenges to the midterm State budget plan in 2021-2023 in ensuring the roadmap of implementation of wage reform and adjustments of social allowances and poverty standards.

In order to fulfill the State budget-finance tasks in 2021, the financial sector will continue to fine-tune the system of collection policies and institutions, create a favourable, transparent and fair investment and business climate, and consider implementing tax and fee exemptions and reductions and extension policies to support enterprises amid difficulties caused by the COVID-19 pandemic.

Due attention will also be given to strengthening the management of revenues, combating revenue losses, and promptly detecting and strictly handling acts of smuggling, trade frauds, production of and trading in counterfeit goods, transfer pricing, tax invasion and tax fraud, and abuse of tax refund policies.

The MoF will also focus on speeding up the disbursement of public investment, especially for key projects of the country and those serving interregional socio-economic development.

Source: VGP, VietnamPlus