Business
Vietnam violates key economic principles, says minister
  • By Nguyen Hien | dtinews.vn | October 23, 2014 11:13 AM

Bui Quang Vinh, Minister of Planning and Investment pointed out that Vietnam has violated three key economic principles in state budget spending at a National Assembly discussion on October 21.

 

Planning and Investment Minister Bui Quang Vinh

According to Vinh, the main violation has been in salary raises for state employees, which have grown faster than higher than productivity. In many other countries, salaries in the sector are based on improvements in productivity.

Vinh also commented that social security spending is higher than the growth of the state budget.

The third red flag raised by Vinh was that recurrent expenditures have exceeded growth in state budget revenues, including investment and development.

He added that the policy currently in place is inadequate to deal with real budgetary problems. According to him, Vietnam’s investment and development expenditure has been falling, currently accounting for only 17% of the country’s total state budget spending, the lowest ever recorded. Meanwhile, recurrent expenditure makes up for 70%, which creates a serious problem for the national economy, he said.

The solution, says Vinh, must consist of new adaptations of current economic institutions, infrastructure and the quality of human resources in the country.

Prime Minister Nguyen Tan Dung recently commented that Vietnam’s public debt has been on an alarming rise. He added that the main task is to focus on management of the state budget in order to ensure the targeted budget deficit.

Under the government’s proposal to the National Assembly, this year, the state budget deficit should remain at 5.3% of the GDP, or VND224 trillion (USD10.6 billion)

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