Sharp eyes needed to watch spending

Like many National Assembly deputies, Ho Chi Minh City’s deputy Tran Du Lich urged the government to make clear how the state budget was allocated in 2011.

“Many questions about 2011’s state budget allocations remain unanswered. We need clearer explanations from the government. Lessons from this year’s lax state budget spending need to be born in mind, so that 2012’s state budget will be more strictly and effectively allocated,” Lich said.

The National Assembly’s Finance and Budget Committee reported that though the government was trying to pare down state spending to bridle inflation and stabilise the macroeconomy, this year’s total actual state spending was estimated to be VND796 trillion ($39.8 billion), exceeding the initial estimations by 9.7 per cent.

“This represents quite a big excess and means the government’s money tightening policy is off target,” said the committee’s chairman Phung Quoc Hien. For instance, spending for development investment rose 15.1 per cent, or VND23 trillion ($1.15 billion), against initial estimations. “It is recommended that the government make this augmentation clear,” Hien said.
The committee ascribed the excessive state spending to many ministries, sectors and localities failing to obey the government’s order to knee cap unnecessary projects.

For example, the Ministry of Planning and Investment (MPI) reported that up to September 22, 2011, nearly VND22.2 trillion ($1.11 billion) was allocated to nearly 5,500 newly-constructed projects, with each project enjoying average investment of VND4 billion ($200,000). “But, the problem is that many of these new projects are unnecessary,” Hien said.

Meanwhile, the skids were not put under many redundant new projects, Hien said, referring to an MPI report which stated that only 22 per cent, or 1,230 out of 5,590 new projects were removed this year. The total trimmed investment capital of 1,230 projects was VND3.8 trillion ($190 million), or 17 per cent of the 5,590 new projects’ total investment capital. “All this ineffective state spending resulted from [the government’s] lax state budget management,” Hien said.

Deputy representing Ho Chi Minh City Tran Hoang Ngan said such spending had contributed to increasing public debt, which this year sat at 54.6 per cent of gross domestic product (GDP) and inflated the budget deficit, which this year stood at 4.9 per cent of GDP. “It is recommended that the National Assembly’s Standing Committee and Finance and Budget Committee re-examine all state investment projects,” Ngan said.

“It is necessary to carefully study 2012’s state spending plan, because I also see that this plan include many irrational expenditures, while the public debt is forecast to hit nearly 60 per cent of GDP next year,” he said.

Ho Chi Minh City deputy Nguyen Thuy Trang said the government was going to spend VND820 billion ($41 million) on developing tourism destinations in 55 cities and provinces in 2012. “Such investment will be a waste. It should be focused into some key tourism destinations like Hue, Halong and Hoi An,” she said.

The government has targeted to spend VND903.1 trillion ($45.2 billion) next year, of which 19.9 per cent will be earmarked for development investment.