Better business performance helps swell budget

Thursday, 2021-05-13 13:13:35
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Rising production and business activities have contributed to enriching the state budget.
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NDO - Despite the numerous difficulties caused by the health crisis, the state budget has seen impressive results, with the national financial security ensured, thanks to a rise in production.

According to the General Statistics Office (GSO), as of April 15, 2021, the total state budget revenue in the economy was at VND462.8 trillion (US$20.1 billion), equal to 34.4% of the year’s estimate.

Meanwhile, total state budget spending hit VND400.3 trillion (US$17.4 billion), tantamount to 23.7% of the year’s estimate – in which recurrent spending reached VND289.4 trillion (US$12.5 billion), development investment was VND74.8 trillion (US$3.25 billion).

Thus, there was a surplus of VND62.5 trillion (US$2.1 billion) from January-April 15, 2021.

However, the Ministry of Finance (MoF), in the first four months of this year, total state budget revenue is estimated to be VND543.4 trillion (US$23.62 billion), up 7.3% compared to the same period last year.

A rise in production

The MoF attributed the positive picture in the state budget to a rise in domestic production and business activities.

Specifically, figures from the GSO showed that industrial production in April 2021 is estimated to have increased by 24.1% over the same period last year in the context of the well-controlled COVID-19 pandemic, and the free trade agreements were effective in leading to active production and business activities. In general, the index of industrial production (IIP) for the first four months of 2021 increased 10% over the same period last year, within which the manufacturing industry rose 12.7% year-on-year.

The IIP in April 2021 is estimated to have grown 1.1% month-on-month and 24.1% year-on-year. Within which the mining industry went up by 3.8% and 1.8%, respectively; manufacturing increased 0.5% and 29.1%; and electricity production and distribution by 2.6% and 16.4%; while water supply, waste and wastewater management and treatment all grew 4.4% and 11.1%.

Overall, for the first four months of 2021, the IIP is estimated to have climbed 10% over the same period last year. In which, manufacturing rose by 12.7% (from 9.7% in the same period last year), contributing 10.2 percentage points to the general growth; electricity production and distribution went up by 6.6% (down by 6.5% from the same period last year), contributeing 0.6 percentage points; and water supply, waste and wastewater management and treatment climbed 7.5% (a decrease of 0.3% from the same period last year), contributing 0.1 percentage points.

Big contributions

“All of positive figures in domestic production have demonstrated the fact that businesses have continue performing well, and making good contributions to the state budget,” said a GSO expert.

For example, PetroVietnam Exploration Production Corporation (PVEP), which is the upstream arm of Vietnam Oil and Gas Group (PetroVietnam), reported that its total revenue in the first quarter of 2021 has been estimated at over VND6.95 trillion (US$302.17 million), exceeding 40% of the initial plan. Its after-tax profit is estimated at VND1.19 trillion (US$51.74 million), and the business’ total contribution to the state budget has reached more than VND1.7 trillion (US$73.9 million), exceeding 41% of the initial plan.

This year, PVEP is expected to invest about US$380 million into exploring, exploiting, and developing new oil and gas fields. Currently, PVEP is implementing 35 oil and gas projects including 29 at home and six abroad.

Meanwhile, PetroVietnam Gas Joint Stock Corporation (PV GAS) reported that its total revenue in the first three months of the year is estimated at VND17.84 trillion (US$775.65 million), equivalent to 102% of the plan for the quarter.

PV GAS’ pre-tax profit is estimated to stand at VND2.8 trillion (US$121.74 million), tantamount to 127% of the quarterly plan, while after-tax profit is estimated to sit at VND2.234 trillion (US$97.1 million), or 127% of the quarterly plan. Notably, PV GAS contributed VND1.25 trillion (US$54.34 million) to the state coffers in the first three months of this year.

In another case, Vietnam National Chemical Group (Vinachem) reported that it has contributed VND420 billion (US$18.2 million) to the state budget in the first quarter of 2021, up 26.1% over the initial plan. This is thanks to the group’s good performance.

Specifically, its gross industrial output is estimated to be more than VND10.6 trillion (US$460.87 million), up 18.5% year-on-year, while its total revenue reached VND11.624 trillion (US$505.4 million), up 22%.

Figures from MoF showed that in 2020, total state budget revenue hit over VND1.507 quadrillion (US$65.52 billion), up by nearly VND184 trillion (US$8 billion) compared to the sum previously reported to the National Assembly (NA), which determines the nation’s annual state budget plan, and remained lower than the sum of around VND1.54 quadrillion (US$66.95 billion) in 2019. Total state budget spending last year exceeded VND1.78 quadrillion (US$77.4 billion), far higher than 2019’s VND1.31 quadrillion (US$56.95 billion).

Total state budget deficit for 2020 stood at VND273 trillion (US$11.87 billion).

This was due to the ongoing COVID-19 pandemic causing a decline in businesses’ performance, making it difficult for them to contribute to the state coffers, and because of the government’s application of policies on supporting health care, production, and social security. Policies on defer tax payments and directly supporting businesses and the public have also amounted to dozens of billions of US dollars.

Last November, the NA adopted a resolution on budget estimation for 2021. In which, total state budget revenue for 2021 will be over VND1.343 quadrillion (US$58.4 billion), and total state budget spending will be VND1.687 quadrillion (US$73.34 billion).

Total state budget deficit will be VND343.67 trillion (US$14.94 billion), accounting for 4% of GDP.

In which, for 2021, the central state budget overspending will be VND318.87 trillion (US$13.86 billion), tantamount to 3.7% of GDP. The local state budget deficit will be VND24.8 trillion (US$1.08 billion), equal to 0.3% of GDP.

If the economy grows 6% in 2021 as set by the NA, total GDP is estimated to be VND6.678 quadrillion (US$290.34 billion) – based on the current calculation methods. If a new calculation method is applied for 2021, the GDP size is expected to be 25% higher than the existing figure.

Also in 2021, the total loans for the state budget are estimated at nearly VND608.57 trillion (US$26.46 billion).

Continued improvements

Notably, the state budget situation in the 2016-2020 period has been far better than that in the 2011-2015 period.

Specifically, the state budget overspending in the 2016-2020 period was 3.5% of GDP, lower than the 5.4% level in the 2011-2015 period, helping ensure national financial security, according to the MoF.

In addition, the structure of the budget revenue has become more stable. The ratio of domestically sourced revenue in the total state budget revenue increased from 68% on average in the 2011-2015 period to 85.5% last year.

“In the 2016-2020 period in general, the total state budget revenue hit VND6.89 quadrillion (US$299.56 billion), up 100.4% over that of the 2011-2015 period, totally completing the initial plan,” said MoF former Minister Dinh Tien Dung. “This was quite a positive level in the context that Vietnam’s state budget revenue in 2020 faced with massive difficulties due to poor performance of businesses.”