Financial strategy for the period of 2021 - 2030: Accelerating economic recovery and development
- QTH-3Q19 Nguyen Thi Nhung
- Feb 20, 2022
- 7 min read
Updated: Mar 28, 2022
At the forum, Deputy Minister of Finance Vo Thanh Hung emphasized the research and development of solutions, in which financial and state budget solutions in the context of the COVID-19 epidemic for economic recovery and growth, ensuring the achievement of macroeconomic stability goals in the current context are extremely important and necessary.
According to Deputy Minister Vo Thanh Hung, in 2012, the Prime Minister signed a decision approving the Financial Strategy to 2020. Looking back on nearly ten years of implementing the Financial Strategy to 2020, although there are limitations, We have had many shortcomings and faced many difficulties and challenges, but thanks to great efforts and high determination, we have achieved many positive results. The profound recognition and assessment of the implementation of the Financial Strategy to 2020 and the conclusion of valuable lessons are the basis for building a financial strategy for the period of 2021 - 2030 with the aspiration making healthy national finance, sustainable development, modernity, and integration, ensuring financial security, macroeconomic stability, finance - currency.
In that context, the Government has closely followed the situation of proactive leadership, direction, synchronous administration, timely made apparent changes, and achieved many positive results. Thereby making an essential contribution to consolidating principal balance, stabilizing the macro-economy, promoting business investment, improving fiscal policy space. The highlights are: State budget-financial institutions have been completed, basically synchronized with institutional reform in relevant fields, contributing to efficient mobilization, allocation, and use of resources.
Along with that, the financial potential - the state budget is enhanced. The scale of state budget collection in the 2011-2020 period is 3.8 times higher than that in the 2001-2010 period. The average rate of mobilization into the state budget in the 2011-2020 period is about 24.7% of GDP, exceeding the target set out in Resolution No. 07-NQ/TW (20-21% of GDP) and Resolution No. 25 /2016/QH14 (23.5% of GDP). The rate of mobilization from taxes and fees in the period 2011-2015 reached about 20.7% of GDP; in the 2016-2020 period, it will get approximately 21% of GDP, achieving the set target of the strategy (21% of GDP). Notably, the budget revenue structure is more sustainable, and the proportion of domestic revenue is increasing in the total state budget revenue. Accordingly, the balance of domestic income increased from 68.7% in 2011 - 2015 to 82% in 2016 - 2020, reaching 85.6% by 2020. As a result, over the past two years, financial and state budget solutions have been proactively put forward to respond to the impact of the Covid-19 epidemic effectively.
Accordingly, it has mobilized all domestic and foreign resources to ensure investment in socio-economic development. Total social development investment capital in the 2016-2020 period equals 33.7% of GDP, reaching the target (32-34% of GDP) and higher than the period 2011-2025 (31.7% of GDP).
Tax and fee policies have been reviewed and completed along with the promotion and modernization of state budget revenue management; the revenue scale is increasing in the 2011-2020 period, it is 3.8 times higher than in the previous period 2001 - 2010. The average rate of mobilization into the state budget from 2011 - 2020 is about 24.7% of GDP.
The structure of budget revenue is more sustainable. The proportion of domestic income is increasing in total state budget revenue. The balance of domestic payment rose from 68.7% in the 2011-2015 period to 82% in 2016-2020, reaching 85.6% by 2020.
However, according to Deputy Minister Vo Thanh Hung, besides the positive results, the implementation of the Financial Strategy to 2020 also faces difficulties and challenges from the fluctuations of the world economic and political environment. world and the internal weaknesses of the economy have not been resolved.
In particular, in terms of fiscal policy, the severe impact of the COVID-19 epidemic, on the one hand, must be an unexpected and large-scale increase in spending; on the other hand, due to the effects of the epidemic and the implementation of solutions to exempt and reduce taxes, charges, the state budget revenue in 2020 did not meet the estimate, but the revenue deficit was much lower than the previous forecast. there. This requires the Government to have an overall financial solution with specific resources to promote economic recovery and development.
In that context, we need to have comprehensive and synchronous financial orientations and solutions to support the economy to overcome the problematic shock caused by the pandemic, restore production and develop sustainably. Building a Financial Strategy is a prerequisite. Because making the right strategy will contribute to creating breakthroughs and take-offs.
The mobilization of resources of the private sector for investment in essential technical infrastructure is still low, while the state budget is increasingly limited in terms of scale and scope of expenditure. State budget expenditure policies, especially policies on hunger eradication and poverty reduction, ensuring social security, and several target programs and national target programs still overlap in policy and expenditure content. State budget resources allocated for national reserves have not achieved the set strategic objectives.
The structure of recurrent expenditure and investment expenditure is still inadequate; effectiveness and efficiency in allocating and using the budget in some areas are still limited; there is no close connection between investment expenditure and recurrent expenditure. The efficient allocation of investment capital is not high, the disbursement is slow, and the source transfer is significant. Most state budget expenditures are controlled according to input factors (standards, regimes, norms) without an utterly legal basis. Annual public debt repayment obligations are high and tend to increase while access to concessional loans decreases.
Economic experts estimate that peace, cooperation, association, and development will still be a big trend in the coming time. However, the strategy between countries and significant partners globally and in the region will be very complicated and harsh. In particular, the Covid-19 pandemic is forecasted to develop complicatedly and challenge to control, severely affecting many fields causing a severe global economic recession. And is likely to last into the early years of a new strategic period, leading to changes in the economic order, structure, mode of global governance, economic activity, and the organization of social life of the world. In addition, new development trends such as digital economy, circular economy, green growth based on science, technology, innovation, and the Fourth Industrial Revolution are happening very rapidly, fast, far-reaching, and multidimensional on a global scale.
Therefore, the development of the Financial Strategy for the 2021-2030 period must aim at building a pioneering, sustainable, modern, integrated, and transparent national financial system. And become the lever of the economy to promote growth, strengthen the economy's resilience, and ensure macroeconomic stability and national economic security. At the same time, it is necessary to implement a reasonable incentive policy, improve the fiscal policy space, create favorable conditions for mobilizing, allocating, and effectively using financial resources, and harmoniously dealing with financial problems. Economic, social, and environmental development issues, ensuring security, national defense, and social security in association with the objectives and tasks of the 10-year socio-economic development strategy for 2021-2030.
To perform the above tasks well, it is necessary to focus on perfecting the policy of mobilizing national financial resources to mobilize resources for development effectively; improve the effectiveness and efficiency of state budget revenue management towards a synchronous, effective and efficient state budget collection system. To continue to restructure revenue sustainably, ensure the state budget revenue to perform the functions and tasks of the state and improve the business investment environment; increase the mobilization of financial resources outside the state budget.
Dr Nguyen Nhu Quynh, Deputy Director in charge of the Institute of Strategy and Financial Policy (Ministry of Finance), said that the view of the Financial Strategy for the period 2021 - 2030 is that national financial policy must play a pioneering role. In mobilizing, liberating, allocating, and effectively using domestic and foreign resources, associated with innovating the growth model in depth, improving the quality of growth based on human resource development, In science and technology, innovation related to digital transformation contributes to orienting and directing social resources into priority socio-economic development goals in each period.
Therefore, according to Mr Quynh, to perform the above tasks well, it is necessary to focus on perfecting the policy of mobilizing national financial resources to mobilize resources for development effectively. This is towards a synchronous, effective and efficient state budget collection system; continue to restructure revenue sustainably, ensure the state budget revenue to perform the state's functions and tasks, improve the business investment environment, increase the mobilization of financial resources outside the state budget.
In addition, closely and effectively manage the state budget deficit, public debt in line with socio-economic development goals, the economy's ability to borrow and repay, and improve the fiscal space to improve the resilience of the national finance.
Dr Vu Nhu Thang, Vice Chairman of the National Financial Supervisory Commission, said that to build a healthy and efficient financial market and limit the risk of losses from systemic crises, Vietnam must focus on reforming the financial sector from an incentive perspective. From that, they established a system of regulations and sanctions, so that market members perceive it to be in the best interest to act efficiently and carefully.
Accordingly, it is necessary to manage and develop the banking system's operation to ensure healthy competition and stability, capital market development and investor base, enhanced regulation, and prudential supervision.
At the same time, improve and complete the financial infrastructure to be proactive in the face of drastic changes coming from financial technology in the coming time, diversify information supply channels to develop products and services. have higher quality but lower prices.
The national financial strategy for the period 2021-2023 is set in economic recovery and promotion, so it is necessary to be more flexible in financial indicators at the beginning of the period and keep it stable during the whole period. Economists confirm: With current potential, fiscal space, and credit, Vietnam can ultimately increase budget spending at a reasonable level and, from 2024, can return to the orbit, control these balances healthier when the economy recovers firmly.
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