Gov’t wastes money on apparatus instead of investing in country

By Anh Vu, Thanh Nien News (The story can be found in the March 7 issue of our print edition, Vietweek)

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Public servants handle paperwork at a tax office in Hanoi

Experts are concerned about state budget overspending this year as expenditures on the government apparatus have overwhelmed development investments.

Minister of Finance Dinh Tien Dung told the press this week that the January-February budget deficit reached more than VND20 trillion (US$948.3 million), or nine percent of the deficit forecast for the whole year.

According to Dung, budget revenues for the two months reached VND130 trillion, an increase of 16.6 percent from previous forecasts and 13 percent over the same period last year.

But expenditures also increased, he said, with spending reaching VND150 trillion, up 4.3 percent annually.

What worries analysts is that expenditure on investments was around VND23 trillion, a decrease of 0.6 percent compared to the same period last year, while expenditure on the State apparatus reached VND108 trillion, up 5.2 percent annually.

The disbursement of infrastructure projects is at the bottom of the expenditure list, according to Deputy Prime Minister Vu Van Ninh.

Usually, a government has to focus on investment rather than spending in order to ensure long-term and stable economic prosperity, experts say. But the principal was reversed in the last two months.

Statistics from the Ministry of Finance also revealed that nearly all expenditure items increased compared to the government’s budget forecast and as compared to the same period last year.

For example, spending on education and vocational training reached VND25.8 trillion, up 14.8 percent from budget forecast and up 7.5 percent year-on-year. Expenditures on health reached VND8.9 trillion, also up 14.8 percent from budget forecast and 5.3 percent year-on-year.

Especially, expenditures on the administrative system reached VND14.6 trillion, an increase of 0.7 percent from the same period last year.

It seems the country has not learnt anything from the bitter lesson of last year, when state budget overspending reached 5.3 percent of GDP, while the government’s goal was to keep it below 4.8 percent.

Late last year, the General Statistic Office announced total budget overspending in 2013 reached VND195.4 trillion, or 5.3 percent of the year’s GDP.

It was the first time the government has conceded that state budget overspending has exceeded the ceiling rate previously set by the National Assembly, Vietnam’s legislature.

Previously, the government urged the house to increase the overspending ceiling from 4.8 percent of GDP in 2013 to 5.3 percent in 2014, and the house later approved the proposal.

Since early this year, the Ministry of Finance has repeatedly ordered authorities nationwide to take necessary measures to help cut regular public spending.

The ministry put forward a series of measures, including postponing the purchase of public cars, reducing the use of electricity, water and stationery at state offices and limiting the organization of meetings and conferences.

It also banned state officials from taking advantage of overseas business trips to travel, adding that local authorities should only assign officials to go abroad when it is really urgent.

However, what the country achieved in the first two months of this year showed that the ministry’s order has not been strictly obeyed.

Cut off, please

Economist Le Dang Doanh, former chief of the Central Institute for Economic Management, said it is not worrying if a country spends a lot on investments, as it will boost economic growth. But it is extremely risky if money is spent on cumbersome administrative machinery, for example, to buy cars, organize festivals and pay for overseas business trips.

“In a time when the government has to borrow money to make up for overspending, the fact that investments do not increase, but regular public spending increases, is similar to the fact that a family has to borrow money all year round to have food to eat,” he said.

Pham Chi Lan, an economist who once worked as an advisor to the Prime Minister and served the vice chairwoman of the Vietnam Chamber of Commerce and Industry, said the government’s spending over the past two months was extremely unreasonable.

She listed a series of measures that the government should take to reduce public spending, including the downsizing of the government workforce and the reduction of costs for meetings, conferences, festivals, ceremonies and overseas trips.

“How come the government calls for the reduction of regular public spending by 10 percent every year, but spending increases each year?” she asked.

She also said it is worrying that the number of new public servants seems to increase while the government has yet to reduce the number of old public servants who have failed to do their work efficiently.

Nguyen Hoang Hai, deputy chairman of the Vietnam Association of Financial Investors, said the Ministry of Finance should clarify expenditure items and show which items exceeded allocated funds, to thus punish those responsible.

The government should boost the downsizing of its workforce, he said, especially to dismiss public servants who lack competence and work spirit.

Hai said local authorities should review plans for festivals, inauguration ceremonies and cultural events in order to cut off spending.

Deputy PM Ninh said ministries and agencies should focus on the disbursement of infrastructure projects, or invest rather than to just “spend” money, to boost economic growth.

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