Supplementing Special Financial and Budgetary Mechanisms for the Capital City

The estimated budget expenditure of Hanoi City is determined based on a higher budget allocation rate compared to other provinces and centrally-run cities, applied for the local budget stability period.

Additionally, to ensure borrowing aligns with the debt repayment capability of each locality, the Law on State Budget stipulates that Hanoi's outstanding debt shall not exceed 60% of the local budget revenue allocated under the decentralization.

This regulation ties the borrowing level to the budget revenue and debt repayment capability to help the City mobilize additional resources for important economic and technical infrastructure projects. Loans are calculated within the City’s budget deficit and decided annually by the National Assembly, ensuring control over the City’s budget repayment capability.

Decree 63/2017/ND-CP does not provide for the Central State Budget (NSTW) to supplement the City’s budget with a specific target corresponding to the total increase in NSTW revenue compared to the Government's assigned estimate. Instead, it states that the City will receive targeted supplementation from the increased NSTW revenue, not exceeding the increase compared to the Government-assigned estimate and not higher than the increase in revenue within the area compared to the previous year’s collected amount. This provision ensures that the NSTW has resources to supplement the City’s budget with specific targets.

Clearly Define Responsibilities for Mobilizing Investment Funds

The Decree clearly defines the responsibilities of the People's Council and the People's Committee of Hanoi City regarding the level and principles for mobilizing financial resources such as official development assistance (ODA) funds, local government bonds, and other legally raised funds for development investment.

Compared to previous decrees, the draft decree has amended and supplemented regulations on the outstanding debt of mobilized capital sources, strengthening resource support from the NSTW for environmental, transportation, irrigation fields, ensuring a positive balance within the safety and national financial security scope, and gradually aligning with the NSTW's capability.

Regarding mobilization of investment funds for development, the draft primarily inherits the stipulations from Decrees 123 and 112, with Decree 63/2017/ND-CP adding regulations prioritizing the allocation of ODA support funds for the City and prioritizing other less favorable preferential funds over ODA.

Specifically, for programs and projects under the expenditure tasks of the City’s budget, the Government borrows foreign funds for the City to re-lend or partially allocate according to regulations. In addition, it adds provisions allowing the City to apply the form of public-private partnership projects.

For some large-scale important projects in the environment, transportation, and irrigation fields managed by Hanoi City that exceed the NSTW’s balancing capability, the People's Committee of Hanoi City reports to the Government and submits to the National Assembly for a decision on supporting funds from NSTW for the City’s budget to implement each project.

Source: Vietnam Financial Times Online

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