State budget at the crossroads

National Assembly Economic Committee deputy chairman Mai Xuan Hung

The government showed strong determination towards reforming budget allocation, linking it closely to economic restructuring with priority given to key and focal projects. Is this reflected in 2012’s state budget plan?

In my view, 2012 budget allocation plan the government has submitted the National Assembly for approval envisages some improvements. First, assignment relative to government bond capital is set on medium-term but not on annual basis and programme-based as previously. Second, the government told the National Assembly it would concentrate investment into key projects which can be finalised within 2012 and at most 2013. In doing that state budget is being distributed in a way with retrenching public investment.

Notwithstanding, though public investment is being curtailed, it is impossible to reduce the capital volume put into investment development in current context of difficult economic development. Therefore, for projects that welcome investment from assorted economic sectors the government should give birth to investment incentives to lure firms via diverse models such as build-operate-transfer (BOT) or public private partnerships (PPP).

Besides, national projects and works operating inefficiently can be given to firms to help the government recoup investment except for some public welfare projects with low near-term economic benefits.

Are there any hurdles in the process of selecting projects subject to curtailing public investment?

The issue tops the National Assembly agenda these days. For instance, from now until 2012 we may only have VND225 trillion ($10.86 billion) government bond capital whereas as much as VND600 trillion ($29 billion) would be needed to pump into projects currently in the development pipeline using government bond capital.

Deputies are digging into what would be criteria for public investment cuts. Priority should be given to projects having two-thirds of total investment being disbursed for early completion. However, such projects are many. Introducing proper criteria for budget capital allocation is then imperative which must be handled quickly.

The public said that budget capital usage efficiency at national target programmes remained low, while the government recommends 16 target programmes for 2011-2015. What is your view?

This has been a hot issue for a long time. National target programmes are in fact constantly rising. Most these programmes source investment capital from state coffers.

In fact, there were cases the capital amount given to local governments for carrying out target programmes was too low failing to meet audit criteria for construction projects. Therefore, I suggest combining these 16 national target programmes and over 30 current supportive programmes to have less than 10 programmes in total.

Besides, budget should be allocated in the medium term from three to five years. Along with capital distribution, provincial leadership shall be responsible for capital expenditure plans and realising assigned state programmes. They should bear responsibility before the government for failures in implementation.