Key contents regarding the preparation of expenditure estimate of ​the local budget for 2025 in Vietnam

Key contents regarding the preparation of expenditure estimate of ​the local budget for 2025 in Vietnam

In Directive 17/CT-TTg dated May 22, 2024, regulations on the preparation of expenditure estimate of ​local budget (LBE) emphasize some key contents as follows:

* Revenue estimate of ​the local budget:

Localities prepare estimates based on the total aggregation of all revenues from taxes, fees, and other revenues in accordance with Article 7 of the Law on State Budget 2015 and related legal provisions. Provincial People's Committees (hereinafter referred to as provincial PC) shall direct financial, tax, customs authorities, and cooperate with related agencies to strictly comply with the preparation of budget revenue estimates and be responsible to the Prime Minister of Vietnam in preparing state budget revenue estimates.

The state budget revenue estimate must be actively and realistically prepared, fully aggregating newly arising revenues in the locality to accurately and comprehensively calculate the revenue sources, without leaving a gap for the locality to allocate revenue targets; specifically analyzing the impacts affecting the 2025 state budget revenue estimates for each locality, sector, revenue, and type of tax.

Based on the proportion of shared revenues between the central budget and local budget approved by the National Assembly and the Provincial People's Council for the 2024 estimates, determine the 2025 budget revenue estimates for each level of local government ensuring conformity with the Law on State Budget 2015 and related guiding documents.

* Expenditure estimate of ​the local budget:

The expenditure estimate of ​the local budget shall be prepared based on the local revenue enjoyed as per the subdivision at point a above, the balancing supplements from the central budget to the local budget determined by the estimated allocation for 2024 (if any), and the supplements from the central budget to the local budget to implement the wage reform in 2025 after utilizing the local wage reform sources (if any). Based on the objectives of the socio-economic development plan for 2021-2025, focusing on the socio-economic development objectives for 2025 of the locality; objectives of the implementation of local budget revenue and expenditure tasks for 2024, the expenditure estimate of ​the local budget shall be prepared for each sector as per the Law on State Budget 2015, ensuring prioritization of sufficient budget allocation for committed projects, issued policies.

* For lottery revenue: Localities allocate the entire amount for development investment; prioritizing investment in education - training and vocational education (including purchasing teaching equipment for the new general education textbook program), health sector; the remaining part to prioritize urgent, important development investment tasks under entities to be invested of local budget.

* Regarding deficit, loan, and debt repayment to the local budget in Vietnam:

Localities are only allowed to propose a provincial budget deficit if they meet all the conditions stipulated in the Law on State Budget 2015, Law on Public Debt Management 2017 and related guiding documents. Simultaneously, fully evaluate the impact of local budget debt, the demand to mobilize funds for development investment, and the local budget's medium-term debt repayment capacity before proposing new loans.

For projects using ODA and concessional loans from foreign donors, localities proactively cooperate with relevant ministries and central agencies to complete procedures, sign, and supplement into the medium-term plan as prescribed, to form the basis for allocating plan capital in the 2025 estimates; forecast the disbursement capability of each loan to prepare the LBE borrowing and deficit plan appropriately.

Localities proactively arrange funds to fully repay all due debts (both principal and interest), especially loans from the Government of Vietnam's foreign borrowing for on-lending.

More details may be found in Directive 17/CT-TTg issued on May 22, 2024.

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