In-depth
Localities urged to tighten financial discipline after recent budget crisis
  • By Bich Diep | dtinews.vn | December 12, 2015 06:58 PM
 >>  Ca Mau City faces budget crisis

The Ministry of Finance has sent an official document to cities and provinces nationwide, requesting local governments to tighten control over budget management after the local media reported Ca Mau and Bac Lieu cities in the southern region were laden with debts.

Speaking to DTiNews reporter, Vo Thanh Hung, chief of the ministry's Budget Department, said that localities are being asked to reduce the budget spending on holding conferences, overseas trips and buying expensive cars.

 

Localities are being asked to reduce the budget spending on holding conferences, overseas trips and buying expensive cars

The ministry has also instructed localities to intensify tax collection and deal with outstanding debts, helping to ensure budget revenues. They were also requested to ensure they actually kept to their agreed budgets. In cases where they faced a budget deficit, localities were being advised to delay programmes or activities to prioritise salaries and other key services.

Agencies will have to learn to deal with their own fiscal problems and seek help from provincial authorities, not the central government, if they fail to repay their debts. Only when the provincial authorities fail in this will the central government consider stepping in, according to Hung.

According to local media, the southern city of Ca Mau is facing a debt of VND300 billion (USD14.2 million) and claims it can’t afford to pay the salaries of local state employees. Huynh Thanh Dung, Vice Chairman of the municipal people’s committee, said that over the recent years, the city had failed to reach its budget revenue targets, leading to the deficit.

Bac Lieu City is also in the same situation and has racked up tens of billions of VND in back payments to the provincial Social Insurance and local companies.

Many economists have raised concerns that that the lack of fiscal discipline at local government will soon become a threat to the sustainability of Vietnam's public debt which is expected to reach 61.3% the country's GDP this year.

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