The curly question of budget spending

The National Assembly will ratify 2012 budget resolution next week. Does the resolution contain a mechanism to upheld urgent projects implementation?

The Finance and Budget Committee, the Finance, Planning and Investment ministries and competent state agencies are procuring deputies’ inputs for 2012 budget draft resolution, from there outlining a final version for submission to the for approval next week.

Ministries, sectors and local governments have proposed scaling up budget supplemental amount to back urgent projects. However, at the time being the proposed amount far exceeds actual budget mobilisation capacity. This year, the government envisages dedicating around VND2.1 trillion ($100 million) to stimulate urgent works. We need clear criteria for urgent works’ capital supplement to ensure publicity, transparency, impartiality and compatibility to actual conditions.

Next year’s proposed budget distribution lacks focus. Is that the case?

The government is proposing augmenting budget distribution to localities assisted with central budget capital by 3 per cent over existing levels. I suppose the distribution should be based on locality groups depending on their actual development conditions and budget mobilisation capacity.

Planned VND800 billion ($38 million) capital distribution to tourism residences development remains unfocused which needs to be restructured with priority given to localities hosting important projects.

The National Assembly just gave the nod to 2012 state budget estimation with VND180 trillion ($8.57 billion) earmarked to investment development out of VND903.1 trillion ($43 billion) total spending. What lies behind the figures?

Some $8.57 billion spending on investment development is set in light of existing regulations. The law regulates that some shorts of collections could not be directed into consumption but to service investment development.

This amount comes from VND140.2 trillion ($6.67 billion) for borrowing to offset overspending, VND37 trillion ($1.76 billion) in collections from land use rights certificates provision and VND3.5 trillion ($166 million) for profits gained in the oil and gas sector.

However, this mount could just meet half of actual capital demands required by approved projects sourcing budget capital. In current context there is no better option than trimming investment spending in 2012 alongside restructuring and accelerating the pace of public investment reforms.

Many deputies assumed the 2012 budget estimation is quite modest. What should be the priority areas for budget surplus usage?

I assume the government should use at least 30 per cent of surplus amount to drive 2012 overspending rate down to just 4.8 per cent of the gross domestic product (GDP), and use at least 30 per cent of surplus amount by local governments for loan repayment to pull down public debt rate and maintain national financial security. The remaining portion will be distributed based on 2012 actual performance.