Photo: Duc Anh
Increases to basic State salaries and additional funds for tackling poverty to come from unused 2015 revenue.
The Standing Committee of the National Assembly (NA) has approved the setting aside of VND2.1 trillion ($94.14 million) for reorganizing the State salary system, paid for by using some of the VND5.46 trillion ($244.77 million) in unused State revenue from 2015.
The decision on using the revenue is in response to a proposal from the government on increasing basic State salaries, pensions, and assistance to military and police veterans by 5-7 per cent a year. Minister of Finance Dinh Tien Dung said the increase will bring the percentage of the budget expenditure used for salaries to 64 per cent.
The allocation comes at a time when Vietnam is struggling to handle its budget deficit, which was over VND66 trillion ($2.95 billion) in the first five months of the year, which is quite high given that taxes and other State revenue are falling, according to the General Statistics Office.
In 2015 basic State salaries increased by 8 per cent, with average salaries for workers at State-owned enterprises (SOEs) being the highest, at VND7.04 million ($331), according to Ms. Tong Thi Minh, Director General of the Department of Labor and Wages at the Ministry of Labor, Invalids and Social Affairs.
The use of State revenue for increases to the basic State salaries obviously adds to the burden on State revenue spending on mass organizations or State-sponsored mass organizations, also known as socio-political organizations. According to the latest report from the Vietnam Institute for Economic and Policy Research (VEPR), the budget for these organizations in 2014 was VND1.261 trillion ($57.8 million), double the figure in 2006.
“Support increased from VND781.3 billion ($34.9 million) in 2006 to VND1.8997 trillion ($85.08 million) for all State mass organizations, accounting for about 1.1 per cent of the total State budget for central ministries and central agencies in 2014,” VEPR wrote. This is equivalent to the amount of expenditure on the Ministry of Planning and Investment, the Ministry of Science and Technology, and the Ministry of Industry and Trade
Moreover, according to analysis from the Bank for Investment and Development of Vietnam (BIDV), budget expenditure in recent times has been unstable and led to inefficiencies, as expenditure for operating activities is growing 18.44 per cent per annum while the expenditure on development activities is only 4.8 per cent per annum and falling.
Of the remaining VND5.46 trillion ($244.77 million) in unused revenue from 2015, VND2.14 trillion ($95.93 million) will be used for cover the budget deficit, while VND1.12 trillion ($50.20 million) will go to cities and provinces earning higher revenue than planned, and VND88 billion ($3.94 million) will be reinvested in localities.
SOE divestment to support poverty reduction
While the use of unused revenue from 2015 has been decided, the VND10 trillion ($448.30 million) earned from SOE divestment is still up for discussion by the NA.
Minister Dung has proposed that VND4 trillion ($179.32 million) be used to further tackle poverty, explaining that few sources are available for this important mission.
Another VND6 trillion ($268.98 million) will be used for development expenditure, of which VND4 trillion ($179.32 million) will be used as reciprocal capital in key ODA projects while VND2 trillion ($89.66 million) will be used for saline intrusion projects in the southern region and the central highlands.
A final decision on the use of the VND10 trillion ($448.30 million) from SOE divestment is still to come from the NA.
- budget expenditure
- basis salary
- budget deficit
- NA Standing Committee