Thông tư 54/2018/TT-BTC hướng dẫn xây dựng dự toán ngân sách Nhà nước năm 2019 và kế hoạch tài chính - ngân sách Nhà nước 03 năm 2019-2021

THE MINISTRY OF FINANCE

Circular No. 54/2018/TT-BTC dated June 8, 2018 of the Ministry of Finance on providing the guidance on formulation of the state budget projection for the year 2019 and the three-year financial - state budget planning for the 2019 - 2021 period

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Government s Decree No. 163/2016/ND-CP dated December 21, 2016 specifying and guiding the implementation of the Law on State Budget;

Pursuant to the Government s Decree No. 45/2017/ND-CP dated April 21, 2017 elaborating on the five-year financial planning and the state budget’s three-year financial planning;

Pursuant to the Government s Decree No. 31/2017/ND-CP dated March 23, 2017 adopting Regulations on preparation, evaluation and approval of the local government’s five-year financial plan, the local government’s five-year midterm public investment plan, the state budget’s three-year financial plan of the local government, and estimation and allocation of the local government budget, and approval of the annual financial statement of the local government;

Pursuant to the Government s Decree No. 87/2017/ND-CP dated July 26, 2017, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Prime Minister s Directive No. 13/CT-TTg dated May 24, 2018 on formulation of the socio-economic development plan and the 2019 state budget;

Upon the request of the Director of the State Budget Department;

The Minister of Finance hereby issues the Circular providing guidance on formulation of the state budget projection for the year 2019 and the three-year financial – state budget planning for the 2019 – 2021 period.

Chapter I

REVIEW OF IMPLEMENTATION OF THE STATE BUDGET’S ASSIGNMENTS IN 2018 AND DURING THE 2016 – 2018 PERIOD

Article 1. Bases for review of implementation of the state budget’s assignments in 2018 and during the 2016 – 2018 period

1. The Resolution No. 07-NQ/TW dated November 18, 2019 of the Politburo on restructuring of the state budget and management of public debts with the aim of ensuring prudent and sustainable development of the national financial system (hereinafter referred to as Resolution No. 07-NQ/TW); the National Assembly’s resolutions, such as Resolution No. 142/2016/QH13 on the 2016 – 2020 period’s five-year socio-economic development plan (hereinafter referred to as Resolution No. 142/2016/QH13); Resolution No. 25/2016/QH14 dated November 9, 2016 on the 2016 – 2020 period’s national five-year financial plan (hereinafter referred to as Resolution No. 25/2016/QH14); Resolution No. 26/2016/QH14 dated November 10, 2016 on the 2016 – 2020 period’s midterm public investment plan (hereinafter referred to as Resolution No. 26/2016/QH14), Resolution No. 49/2017/QH14 dated November 13, 2017 on the 2018 state budget estimate and Resolution No. 50/2017/QH14 dated November 14, 2017 on the 2018 central budget allocation, and Resolutions of all-level People’s Councils on the 2016 – 2020 period s five-year financial plan of the local government, the 2016 – 2020 period’s midterm public investment plan and the 2018 local government budget estimate and allocation.

2. The Prime Minister’s Decisions, such as Decision No. 1915/QD-TTg and Decision No. 1916/QD-TTg dated November 29, 2017 on the state budget’s expenditure assignment for the year 2018; Decision No. 2131/QD-TTg dated December 29, 2017 on the state budget’s planned investment fund assignment for the year 2018; Decision No. 2130/QD-TTg dated December 29, 2017 on supplementary assignment of planned foreign funds derived from the central budget for midterm public investments for the 2016 – 2020 period and the year 2017 which are invested in projects using fund disbursements made in 2016 and earlier (hereinafter referred to as Decision No. 2130/QD-TTg); Decision No. 280/QD-TTg dated March 8, 2018 on adjustments to the plan for allocation of Government bond-derived funds for the 2012 – 2015 period and the 2014 – 2016 period, extension of the duration of implementation and disbursement of the 2018 central budget’s investment funds (hereinafter referred to as Decision No. 280/QD-TTg); certain decisions on assignment of the midterm public investment budget for the 2016 – 2020 period, assignment of the midterm budget for national target programs for the 2016 – 2020 period of competent authorities and other decisions on supplementation of the budget which are issued in the course of administration of the 2018 state budget; Decisions of People s Committees at all levels on the local government budget estimate and the local government budget allocation for the year 2018.

3. Competent authorities’ regulatory documents related to the 2018 state budget, including the Government’s Resolutions (Resolution No. 01/NQ-CP dated January 1, 2018 on main regulatory duties and measures for implementation of the socio-economic development plan and the 2018 state budget estimate (Resolution No. 01/NQ-CP), Resolution No. 19-2018/NQ-CP dated May 15, 2018 on continued implementation of main duties and measures for improvement of business environment and promotion of national competitiveness in 2018 and ensuing years (Resolution No. 19-2018/NQ-CP), and other Resolutions issued in the Government’s monthly regular meetings); the Prime Minister’s Decision No. 579/QD-TTg dated April 28, 2017 on principles of grant of the central budget’s target subsidies for the local government budget on implementation of social security policies for the 2017 - 2020 period (Decision No. 579/QD-TTg); the Directive No. 07/CT-TTg dated March 5, 2018 on maintenance of effective implementation of the Resolution No. 35/NQ-CP dated May 16, 2016 on business support and development till 2020 (Resolution No. 35-NQ/CP) and the Prime Minister’s Directive No. 26/CT-TTg dated June 6, 2017 on continuation in effective implementation of the Resolution No. 35/NQ-CP in a spirit of the Government’s support for businesses in 2018; Resolutions of People’s Councils, Decisions of People’s Committees and Directives of Chairpersons of People’s Committees at all levels on key regulatory duties and measures for implementation of the socio-economic development plan and the local government budget estimate for the year 2018; the Circular No. 132/2017/TT-BTC dated December 15, 2017 of the Ministry of Finance on implementation of the state budget estimate for the year 2018 (Circular No. 132/2017/TT-BTC).

4. Evaluation reports on implementation of financial – state budget duties in the first 6 months of a budgetary year; forecasts of and measures for striving for accomplishment of the state budget estimate in the remaining months and the entire year 2018, which have been decided by competent authorities.

5. Competent authorities’ conclusions and recommendations regarding reform of administrative procedures, inspection, audit and resolution of claims or complaints, thrift practice, anti-extravagance, corruption prevention and control with respect to the state budget revenues and expenditures; demands for tightening disciplines, financial rules, prevention of loss of state budget revenues, prevention of transfer pricing abuse, recovery of tax debts and reduction in the rate of outstanding tax debts; results of implementation of social security policies, salary reform policies, policies for people providing meritorious services, poor households, minority people and population living in remote and isolated areas; provision of adequate funds for maintenance of national defense, security, political stability and social order.

Article 2. Review of the state budget revenue collection in 2018 and during the 2016 – 2018 period

1. Evaluation of implementation of the state budget revenue collection assignment in 2018

Evaluate collection of state budget revenues in accordance with the 2015 Law on State Budget without accounting for fee and charge collections converted into service costs under the provisions of the Law on Fees and Charges, and deductibles of state regulatory authorities or withheld revenues generated from services rendered by public non-business units and state enterprises, into the state budget.

Based on the estimated state budget revenue for the first six months of the budgetary year, the macroeconomic outlook for 2018, the current situation of business operations and the variation in market prices in the last six months of the budgetary year, ministries, central and local agencies shall review and evaluate factors affecting collection of state budget revenues and propose regulatory measures in a bid to exceed the expected state budget for 2018 already approved by the National Assembly and People s Councils at all levels; assess implementation of assignments in 2018 with an emphasis on the followings:

a) Assessment and analysis of the causes of increase and decrease of state budget revenue in 2018 with attention paid to:

Business, export and import advantages and difficulties of enterprises and economic organizations due to impacts of domestic and foreign factors; possibility of implementing new investment projects, expansion investment projects and intensive investment projects of enterprises; production and consumption volume, selling price and profit of key goods and services available within their operating areas; the growth rate of gross consumer commodity and service retail sales; market variations.

Impacts of variations in crude oil prices and agricultural commodity prices in the world and domestic markets, impacts of implementation of commitments on international economic integration, implementation of the Resolution No. 35-NQ/CP, Resolution No. 19-2018/NQ-CP, and Resolution No. 36a/NQ-CP dated October 14, 2015 on e-Government, monetary, credit, trade, investment and price policies, and reform of administrative procedures and other factors on the economy and the state budget revenue in the first six months of the budgetary year.

b) Review of the process and outcome of implementation of measures for state budget revenue management under Resolution No. 01/NQ-CP; the process of implementation of the amended and supplemented tax, fee and charge policies in effect in 2018; the adjustment of the special consumption tax rate made according to the schedule of adjustment of taxes levied on a number of commodities under the Law on Amendment and Supplement to a number of Articles of the Law on Special Consumption Tax (SCT), the Law on Amendment and Supplement to a number of Articles of the Law on Value Added Tax (VAT), Law on SCT and Law on Tax Administration; regulations on the method of calculating and the level of fee for grant of the right to extract the water resource according to the Government’s Decree No. 82/2017/ND-CP dated July 17, 2017; regulations on reorganization and disposition of public property according to the Government’s Decree No. 167/2017/ND-CP dated December 31, 2017 (Decree No. 167/2017/ND-CP), other regulatory documents, policies and regulations on collection of taxes, fees and charges that influence implementation of the State budget revenue assignments in 2018.

c) Assessment of the process of inspection, examination and recovery of tax arrears:

Review and determine total tax debt amount as at 31 December 2017; report on the implementation of activities such as giving incentives for and imposing law enforcement actions on recovery and remission of tax arrears in the first 6 months of 2018 and introduction of the report on approaches to dealing with tax arrears to the National Assembly according to the National Assembly s Resolution No. 55/2017/QH14 dated November 24, 2017 on questions and answers at the 4thsession of the XIthNational Assembly; assess the estimated value of tax debts as of December 31, 2018.

Assess the results of implementation of recommendations of the State Audit, the Inspectorate, and the decisions on retrospective collection of tax issued by tax authorities at all levels in implementing the plans and tasks of inspection and examining compliance with tax laws.

d) Review of declaration, payment and refund of VAT arising in 2018 according to the provisions of the VAT Law. It shall include an estimate of the amount of VAT refund in 2018 associated with strengthening of supervision, inspection and audit carried out after completion of VAT refund, actions on recovery of VAT refunds in contravention of regulations; proposals for adjustment of the VAT refund management mechanism so as to ensure coherence and compliance with law.

dd) Assessment of collection of state budget revenue from land (e.g., collection of land use fees, land rents) in accordance with the law on land and collection of state budget revenues from disposition and handling of real property in accordance with Decree No. 167/2017/ND-CP.

e) Assessment of results of cooperation between ministries, central agencies and local authorities in the management and removal of difficulties and problems regarding collection of state budget revenues, auctioning of state property, auctioning of land use rights and inspection, examination and stimulation of recovery of tax debts, fight against losses, transfer pricing abuse; unsolved problems, difficulties and possible solutions.

g) Assessment of results of collection of fees and charges, clearly stating the total amounts collected and remitted into the State Budget, total amount retained as against the projection and the relevance of the rate of the retained fee; collection of administrative fines, monetary penalties and other confiscations in the first half of the budgetary year and for the whole year 2018.

i) Assessment of collection of tuition fees, medical service and other public service charges (not included in the list of fees and charges defined in the Law on Fees and Charges).

2. Evaluation of implementation of the state budget revenue assignments for the 2016 – 2018 period:

On the basis of the estimation for the entire year 2018, assess the accumulation of total state budget revenues for the 2016 - 2018 period compared to the targets and the five-year plan for the 2016-2020 period according to Resolutions of the National Assembly and People s Councils, and details of each source of state budget revenue generated from collection of land use fees, lottery proceeds, dividends and after-tax profits, and other domestic revenues (exclusive of land use fees, lottery proceeds, dividends and after-tax profits), income from import and export activities, grants or aids (if any); assess advantages and disadvantages, and propose regulatory measures for administration of state budget revenues in the coming time.

Article 3. Review of implementation of investment and development (or capital) expenditure assignments

1. Evaluation of implementation of capital expenditure assignments in 2018:

a) With respect to the task of allocation and implementation of capital expenditures in 2018, the following assessment shall be conducted:

- Assessment of establishment and allocation of the investment and development budget in 2018, including sources of funding from state budget revenues, government bonds and other retained off-budget revenues (including Decisions on amendment and supplement to the Decision No. 2130/QD -TTg and Decision No. 280/QD-TTg): The estimation and distribution of finances, allocation of investment and development expenditures for projects and construction works in 2018 under the Public Investment Law; the time of allocation and assignment of the budget to investors; the results of allocation of the state budget’s finances for recovery of advanced budgetary capital and repayment of capital construction debts.

- Assessment of formulation, appraisal and approval of investment policies and decisions for public investment projects and adjustment of public investment projects (if any) in accordance with the Public Investment Law and regulatory documents of the Government and the Prime Minister.

- Assessment of implementation of capital expenditure assignments in 2018 (including the amended and supplemented Decision No. 2130/QD-TTg, No. 280/QD-TTg): measuring the value of workloads and total finances for these workloads by end of the second quarter of 2018 (including payment for completed workloads and advance payment of investment capital), estimating workloads and finances for payment for these workloads by end of December 31, 2018, providing details about rates of disbursement within, under or over budget, causes and recommendations (including the schedule of detailed appendices for each project, data on total approved investment capital, payment finances accrued by end of 2017, and the plan for capital (including capital which is supplemented, adjusted and estimated in 2018, enclosing explanatory notes).

Assessing implementation of investment projects from revenues gained by sale of land-attached property and transfer of land use right (including detailed reports on completed projects for which payments have not been settled due to unavailability of budget allocations for 2018; from revenues generated from sale of land-attached property and transfer of land use right which have been remitted to the budget, and of which use has not been proposed until December 31, 2017, and the estimated revenue amount in 2018).

The Ministry of Health, the Ministry of National Defense and the People s Committee of Ho Chi Minh City shall prepare an assessment report on implementation of projects on investment and construction of 05 hospitals and those at the central and terminal level in Ho Chi Minh city which are financed by the Fund for Support for Reorganization and Development of Enterprises (details of total amount to be disbursed from the Fund, the disbursed amount, the amount approved but not disbursed and the amount not yet disbursed), investment and development budget allocations of the central budget for 2017 - 2018 and implementation thereof; give recommendations for ensuring conformity with the project implementation schedule (if any).

Preparing a consolidated report on assessment of outstanding debts incurred from capital construction workloads financed by state budget revenues (including Government bonds under the Prime Minister s directions given in the Directive No. 27/CT-TTg dated October 10, 2012, the Directive No. 14/CT-TTg dated June 28, 2013 and the Directive No. 07/CT-TTg dated April 30, 2015, which specifies the debt owed as at December 31, 2017, the debt recovered in 2018, the estimated capital construction debt owed in 2018 and the advance amount remaining as at December 31, 2018 (providing details thereof in specific projects).

Assessing implementation of projects and programs financed by funding sources such as loans and repayments for loans of the local government budget (even including advances derived from available amounts of the State Treasury).

Preparing an assessment report on the full settlement of debts owed in completed investment projects, clearly stating the number of projects which have already completed without completing full settlement of debts by the end of June 2018 and the number of projects expected to be executed by end of 2018; causes and solutions.

Assessing difficulties arising during the process of investment management in accordance with the Law on Public Investment, the Law on Construction and relevant legislative instruments, and proposing solutions.

b) Results of implementation of development aid expenditure assignments shall be assessed as follows:

Assessing implementation of preferential investment credit by the State (total credit growth rate, sources of capital for implementation of the credit growth plan, state budget allocations for interest rate differences, ...); beneficiaries of preferential credit; the focal point for implementation of credit policies; interest rates; reform of loan approval procedures.

Assessing implementation of policies on extension of loans to poor households, near-poor households, households newly escaping poverty and ethnic minority households facing with extreme difficulties; student credit; grant of loans for job creation and labor export; grant of loans for clean water and environmental sanitation programs at rural areas;... Each loan program should clarify legal bases, scope and subjects of application, loan-granting conditions, average deposit interest rates and average lending rates; outstanding loans determined at the beginning of the year, the number of loans and repayments arising in the year, the estimated level of closing balance; the amount of debts incurred from using the budget offsetting interest rates at the beginning of the budgetary year, the amount arising during the budgetary year, the complementary amount, and the amount expected to still owe at the end of the budgetary year.

c) Assessing implementation of mechanisms and policies for calling for private sector involvements (total resource and structure of private sector resources for investment by sectors and domains; number of establishments developed by using private sector resources; results achieved; existing problems, causes and solutions).

2. Evaluation of implementation of capital assignments for the period of 3 years from 2016 to 2018:

Based on the assessment of implementation of expenditure assignments during the whole year 2018, assessment of accumulation of the results of the implementation of assignments in 3 years from 2016 to 2018 compared with the objectives and the five-year plan for the 2016 - 2020 period shall be made and clearly specify the followings:

a) Cumulative investment and development expenditures in the 2016 – 2018 period compared to the midterm plan assigned by the competent authority for the 2016 – 2020 period, including details of expenditures from the local government budget, the supplementary target allocations of the central budget such as government bonds and foreign capital (including loans and non-refundable aids), and domestic capital - if any.

b) The number of debt-incurring capital construction projects which has been synthesized and given budget allocations in the medium-term public investment plan for the 2016 – 2020 period, the situation of budget allocations for the years from 2016 to 2018 to settle capital construction debts, the proposed number of budget allocations for the 2019 – 2020 period; the number of completed projects with outstanding capital construction debts which have not yet to be reported in the medium-term plan, the amount of debts that may be additionally incurred, proposed measures to settle the above-mentioned capital construction debts.

c) The accumulated amount of advances reported in the medium-term public investment plan for the 2016 – 2020 period, the situation of budget allocations for the 2016 – 2018 period to recover advanced capital, the estimation of the remaining amount of budget allocations expected to be recovered in the 2019 – 2020 period; the amount of advances arising till now which have not been reported in the medium-term public investment plan (if any), and proposed solutions.

d) Accumulation of the implementation of the budget of development assistance expenditures for the period 2016 – 2018 period as compared with the budget for the 2016 – 2020 period which is assigned by competent authorities, details of budget allocations for specific programs, support policies and anticipated difficulties or possible recommendations.

dd) Implementation of mechanisms and policies for calling for private sector involvements for the 2016 – 2018 period compared with the plan for the 2016 – 2020 period (details about total resource and structure of private sector resources for investment, classified by sectors or industries; the number of establishments developed by using private sector resources, classified by sectors or industries; achievements; existing problems, causes and solutions).

Article 4. Review of implementation of recurrent expenditure assignments

1. Ministries, central and local agencies shall focus on making an assessment of implementation of recurrent expenditure budget assignments for 2018, including the following contents:

a) Assessment of distribution, allocation and implementation of the state budget estimates in the first half of the budgetary year and for the whole year 2018, corresponding to specific assigned sectors; results of implementation of objectives, tasks, major programs and projects; Difficulties and unresolved issues and proposed solutions.

b) Assessment of results of cuts in recurrent expenditures which have been assigned in the budget estimate at the beginning of the budgetary year to central and local ministries and agencies, but not yet disbursed as of June 30, 2018 under the provisions of the Decision No. 01/NQ-CP.

c) Assessment of implementation, difficulties and unresolved issues arising in the course of implementation of assignments, regimes, mechanisms and regulatory policies, and recommendation about remedies to be carried out in 2018, specifically including:

- With respect to regulatory policies and mechanisms: Making an overall assessment of all regulatory policies and mechanisms; reviewing and recommending amendments and supplements to regulatory policies and mechanisms irrelevant to the reality.

- Reviewing guidance, implementation and results in the first half and the whole of the budgetary year (specifying objectives and set-aside budget) of implementation of the Resolution No. 18-NQ/TW dated October 25, 2017 of the 6thCentral Conference of the Central Committee of the XIIthNational Assembly on certain issues about continued reform and building of organizational structure for maintenance of simplification, efficient and effective operations of the entire political system (Resolution No. 18-NQ/TW), the Resolution No. 39-NQ/TW dated April 17, 2015 of the Central Executive Committee on downsizing and restructuring of the staff including officials, public servants and employees (Resolution No. 39-NQ/TW) and Conclusion No. 17-KL/TW dated September 11, 2017 of the Ministry of Politburo on the situation of staffing and downsizing of the staff in organizations of the political system during the 2015 – 2016 period, objectives, tasks and solutions for the 2017 – 2021 period (Conclusion No. 17-KL/TW); Plan No 07-KH/TW dated November 27, 2017 of the Politburo s Committee on implementation of the Resolution No. 18-NQ/TW (Plan No 07-KH/TW); the Government’s Decree No. 10/NQ-CP dated February 3, 2018 on the Government s program of action for implementation of the Resolution No. 18-NQ/TW; the Government’s Decree No. 108/2014/ND-CP dated November 20, 2014 on the downsizing policy (Decree No. 108/2014/ND-CP); the Prime Minister’s Directive No. 02/CT-TTg dated January 6, 2017 on strengthened implementation of the downsizing policy (Directive No. 02/CT-TTg); the Prime Minister’s Decision No. 2218/QD-TTg dated December 10, 2015 on the Government’s plan to implement the Resolution No. 39-NQ/TW (Decision No. 2218/QD-TTg); the Government’s Decree No.26/2015/ND-CP dated March 9, 2015 prescribing regimes and policies for officials who fail to meet age requirements for eligibility to be re-elected or re-appointed to hold office in agencies of the Communist Party, the State, and socio-political organizations (Decree No. 26/2015/ND-CP).

- Reviewing guidance, implementation and results in the first half and the whole of the budgetary year (specifying objectives and set-aside budget) of implementation of the Resolution No. 19-NQ/TW dated October 25, 2017 of the 6thCentral Conference of the Central Committee of the XIIthNational Assembly on continued reform of the organizational and administrative system, improvement of quality and efficiency of operations of public non-business units (Resolution No. 19-NQ/TW), the Government’s Resolution No. 08-NQ-CP dated January 24, 2018 on the Government s program of action for implementation of the Resolution No. 19-NQ/TW; the Government’s Decree No. 16/2015/ND-CP dated February 14, 2015 on the mechanism for autonomy granted to public non-business units (Decree No. 16/2015/ND-CP); other Government’s Decrees on the mechanism for autonomy in particular non-business sectors (the Decree No. 54/2016/ND-CP dated June 14, 2016 on the mechanism for autonomy granted to public science and technology bodies (Decree No. 54/2016/ND-CP), Decree No. 141/2016/ND-CP dated October 10, 2016 on grant of autonomy to public non-business units in the economy and other sectors (Decree No. 141/2016/ND-CP), etc.).

In the healthcare sector, assessing the results of cuts in recurrent expenditures for healthcare service providers according to the roadmap for adjustment to medical prices and fees, and use of funds allocated under the guidance given in the Circular No. 132/2017/TT-BTC, difficulties, unresolved problems and recommendations.

In the training, education and vocational training sector, giving the specific evaluation of the results of the implementation of Resolution No. 77/NQ-CP dated October 24, 2014; identifying difficulties, unresolved issues, solutions and recommendations for applying and expanding the implementation of the Resolution No. 19-NQ/TW.

d) Assessment of implementation of the multi-dimensional poverty line under the Prime Minister s Decision No. 59/2015/QD-TTg dated November 19, 2015 and the Government s Resolution No. 40/NQ-CP dated May 10, 2017 in the first 6 months and for the whole year of 2018; difficulties, unresolved issues, recommendations and proposed solutions.

2. Review of implementation of recurrent expenditure budget assignments for the 2016 – 2018 period shall be carried out as follows:

With respect to programs, projects and tasks with specified targets and plans that take place in the 2016 - 2020 period, making the detailed assessment of specific assignment decisions, total budget and phasing of implementation of assignments in each year of the 2016 – 2020 period, difficulties, unresolved issues and recommendations.

Making a cumulative assessment of implementation of the Resolution No. 39-NQ/TW for the three-year period from 2016 – 2018 in comparison with objectives set out in the Resolution No. 39-NQ/TW, providing details about specific objectives and total budget set aside for implementation.

Giving a cumulative assessment of implementation of Decree No. 16/2015/ND-CP, Decree No. 54/2016/ND-CP and Decree No. 141/2016/ND-CP, providing details about issuance of guidance documents under the Prime Minister s Decision No. 695/QD-TTg dated May 21, 2015 on the plan for implementation of Decree No. 16/2015/ND-CP; implementation of the roadmap for addition of full costs to public service charges and prices; downsizing activities carried out during the three-year period from 2016 to 2018 (specifying % of the staff reduced as compared with December 31, 2015); recurrent expenditures which have been decreased in the three-year period from 2016 to 2018 (specifying % of the staff reduced as compared with December 31, 2015); financial autonomy granted to public non-business units as of December 31, 2018 (as compared to December 31, 2015); making a detailed assessment for each non-business sector; difficulties, unresolved issues and recommendations.

Article 5. Review of implementation of the national reserve budget

Ministries and sectoral administrations in charge of national reserve commodities shall evaluate implementation of the plan and estimate of state budget expenditures for the national reserve in 2018 and the previous years’ brought-forward expenditures, including: the plan and estimate of expenditures for purchase, sale, alternate receipt and dispatch for replacement of commodities, dispatch for sale of commodities; state budget expenditures for reserve operations (giving details about quantity, value, receipt of commodities, fund and budget disbursement, ...) by end of June 30, 2018 and make projection about implementation of the budget for the entire year of 2018.

Based on the projection of budget implementation for the whole year of 2018, making an assessment of implementation of the national reserve for the 2016 – 2018 period compared with the objectives, the five-year plan for the 2016 - 2020 period and the strategy for national reserve development by 2020.

Article 6. Review of implementation of national target programs, target programs, other programs or projects financed by foreign funding sources

1. With respect to national target programs and target programs:

a) Assessment of implementation of the year 2018’s budget estimate for national target programs and target programs

- Host ministries of national target programs/target program already approved from 2017 and earlier shall prepare a report on issuance/implementation of directive documents and mechanism for cooperation with the agencies assigned to act as leaders of projects/components of national target programs.

- Host bodies of target programs already approved in 2018 or being under approval shall submit a progress report to the Prime Minister, prepare a review report on construction or cooperate in drafting of instructional documents.

- Ministries, central and local agencies shall evaluate allocation, assignment and implementation of budget expenditures for national target programs and target programs for the year of 2018; advantages, difficulties and unresolved issues upon implementation; In case of national target programs and target programs using foreign funding sources, prepare the detailed report on disbursement of funds derived from ODA grants, ODA loans, preferential loans and overseas non-government aids, and financial mechanism and recommendations (if any).

As regards national target programs on sustainable poverty reduction, a detailed evaluation of implementation of these programs by districts newly added by the Prime Minister’s Decision No. 275/QD-TTg dated March 7, 2018 shall be made.

b) Based on the projection for implementation of budget expenditures for 2018, it shall be necessary to make an assessment of accumulation of implementation of national target programs and target programs for the 2016 – 2018 period compared with the assigned midterm budget for the 2016 – 2020 period (if any) and compared with total approved budget for the 2016 – 2020 period (in case of the midterm budget not yet/not assigned), difficulties, unresolved issues and recommendations.

2. With respect to other programs and projects using foreign capital:

a) Ministries, central and local agencies shall make an evaluation of allocation, assignment and implementation of budget expenditures in 2018 for other programs and projects using foreign capital (including umbrella projects); elaborating on funding sources such as ODA grants, ODA loans, preferential loans and overseas non-government aids, financial mechanism and recommendations (if any).

Especially for programs and projects using ODA loans and/or preferential loans in which there is a possibility of disbursing funds in excess of the assigned budget (if any); programs and projects which are funded by grants not yet included in the budget estimate and necessary to be immediately implemented in 2018, it shall be obligatory to send the Ministry of Planning and Investment and the Ministry of Finance reports which are consolidated into a final report to the Prime Minister to seek his decision on approval of any adjustment to these funds within the overall budget constituted by assigned overseas funding sources, or make representations to the National Assembly Standing Committee to seek its decision on approval of supplements to the budget prior to implementation in case these funds exceed that overall budget.

b) Based on the projection for implementation of budget expenditures for 2018, it shall be necessary to make an assessment of accumulation of implementation for the 2016 – 2018 period compared with the assigned midterm objectives and budget for the 2016 – 2020 period (if any)/the plan for implementation for the 2016 - 2020 period in accordance with signed agreements or arrangements, difficulties, unresolved issues and recommendations.

Article 7. Review of provision of the adequate budget for pay adjustments

1. Ministries and central agencies shall report on:

a) Tenure system, payroll, allowances and legally required contributions (e.g., contributions to the social insurance, health insurance, unemployment insurance and union dues).

b) Demands for the budget for a pay reform under the Government s Decree No. 72/2018/ND-CP dated May 15, 2018 prescribing the rate of base pay applied to public officials, servants, employees and armed forces.

c) Funding sources providing an adequate budget for the pay reform in 2018. Concerning this content, the report should clarify:

- The funding source coming from recurrent expenditures within the allocated state budget for 2018; the funding source coming from pay reform expenditures which are not used up till 2017 and carried forward for use in 2018 (if any), and the funding source, not used up and brought forward for use in 2019, which is intended for any adjustment in the base pay rate (if any).

- The funding source derived from revenues retained to conform to employee policies according to the plan for proportioning of costs included in public service prices and fees under the Decree No. 16/2015/ND-CP and other Decrees on autonomy granted to sector-specific public non-business units.

- The funding source which is set aside in connection with implementation of the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW.

2. Local governments over provinces and centrally-affiliated cities shall report on:

a) Payroll, allowances, benefits and legally required contributions (e.g., contributions to the social insurance, health insurance, unemployment insurance and union dues) implemented in 2017 and projected for 2018;

b) Demand for an adequate budget for the pay reform in 2018;

c) Use of local resources for implementation of the pay reform in 2018, including:

- A saving of 10% in recurrent budget expenditures (exclusive of salaries and the like); an increase of 50% in local government budget revenues as prescribed; a surplus amount of funding for the pay reform (if any) used for budgeting social welfare policies adopted by the Central Committee in accordance with the Decision No. 579/QD-TTg;

- The amount of revenues retained according to regulatory regimes where corresponding to the plan for proportioning of costs included in public service prices and fees under the Decree No. 16/2015/ND-CP and other Decrees on autonomy granted to sector-specific public non-business units;

- The funding source which is set aside in connection with implementation of the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW.

d) Review and identification of the demand for the budget for grants and subsidies for extremely difficult socio-economic regions under the Prime Minister’s Decision No. 131/QD-TTg dated January 25, 2017 on approval of the list of extremely underprivileged communes at coastal areas and on islands, and the Prime Minister’s Decision No.582/QD-TTgdated April 28, 2017 on approval of the list of extremely underprivileged villages, Region-III, Region-II and Region-I communes within minority areas and mountains for the 2016 – 2020 period.

Article 8. Evaluation of implementation of state budget assignments of provinces and centrally-affiliated cities in 2018 and for the 2016 – 2018 period

In addition to the aforesaid general requirements, Local governments over provinces and centrally-affiliated cities shall focus on:

1. Evaluating mobilization of local financial resources for implementation of their socio-economic development assignments in 2018, accumulated results of mobilization of local financial resources for implementation of their socio-economic development assignments for the three-year period from 2016 to 2018, compared with the five-year plan carried out during the 2016 - 2020 period, and identifying difficulties, unresolved issues and recommendations.

2. On the basis of the projection for collection of budget revenues on these local jurisdictions for the entire year of 2018, evaluating accumulated implementation of the state budget revenues for the 2016 - 2018 period compared to the five-year plan for the 2016 – 2020 period, clearly stating specific sources of revenues generated from land use, lottery, dividends, after-tax profits, remaining domestic revenues and those earned from imports, exports, aids or grants (if any).

3. Evaluating capability of balancing the local government budget with the state budget estimate, measures that have been and will be implemented to ensure the local government budget balance in cases where it is expected that the local government revenue is reduced in 2018; evaluating the balance between the local government budget and the budget estimate in each year of the 2016 – 2018 period; evaluating difficulties, unresolved issues and giving recommendations (if any).

4. On the basis of the projection for implementation of the local government budget expenditure assignments in 2018, evaluating accumulated implementation of the local government capital budget expenditure assignments for the 2016 - 2018 period compared to the midterm public investment plan for the 2016 – 2020 period, clearly specifying funding sources allocated from the local government budget (e.g., land use fees, lottery revenue, the local government s remaining budget revenues and on-lent funding source) and the central budget’s supplementary targeted allocations (e.g., allocations derived from government bonds, overseas and other funding sources - if any).

5. Reviewing implementation of social welfare policies:

In the review of each policy, there must be a report on specific beneficiaries (providing details about beneficiaries of that policy, such as households living in income or multidimensional poverty, in each review contents relating to shortage of basic services), and the demand for the budget for implementation of social welfare policies in 2018 (including an interpretation of bases for determination of that demand and method of calculating the budget).After funding sources for implementation of policies for which allocations have been defined in the local government budget in 2017 (the first year of the budget stabilization period of 2017 – 2020), the central budget’s subsidies, and pay reform expenditures remaining after completion of the pay reform within a budgetary year (if any), have been used up, in case of a deficiency in the budget for implementation of social welfare, the Ministry of Finance shall request competent authorities to offer 2019’s central budget allocations in order to provide local authorities with an adequate amount of funding for implementation of these policies (any action concerning provision of supplementary allocations shall not be allowed during its administration of the annual budget).

6. Reviewing reorganization, downsizing and reform of public sector units in 2018, and reviewing accumulated implementation for the three-year period of 2016 – 2018:

Making an evaluation according to instructions given in Article 4 of this Circular, specifically for 2018 and evaluating accumulated implementation thereof for the three-year period of 2016 – 2018; making a detailed evaluation of achievements compared to specific objectives and tasks; evaluating the budget amount intended for implementation of each Resolution (giving detailed explanations about the budget used for carrying out specific objectives defined in Resolutions, the reduction in expenditures for payment of employee salaries, expenditures for payment of overheads corresponding to the number of employees remaining after downsizing, the reduction in subsidies for state-owned public sector units which have already been reorganized or are transformed into those belonging in the group of units given autonomy at a higher level, the reduction in expenditures for reorganization of public administrative units, and the reduction in expenditures used as subsidies for these units due to their increased revenues according to the plan for correct and full inclusion of fees into service prices under the Decree No. 16/2015/ND-CP and Decrees on autonomy for the Government’s public sector-specific units, etc.); evaluating difficulties, unresolved issues and recommendations (if any).

7. Reviewing funding sources for the pay reform in 2018, the surplus amount (if any) remaining after use of an adequate amount of funding to meet the pay reform demand in 2018, funding sources for payment of subsidies on behalf of the Central Budget for implementation of social welfare policies enacted by the Party’s Central Committee (a corresponding reduction in the Central Budget’s subsidies) under the provisions of the Decision No. 579/QD-TTg, and revenues authorized by competent authorities to be used as capital expenditures (with respect to local jurisdictions that remit their revenues to the Central Budget) in accordance with the Resolution No. 49/2017/QH14.

8. Preparing a detailed report on budget allocations (including the amount of the central budget allocations used as targeted subsidies for the local government budget – if any) and use of the local government budget provisions for carrying out national security and defence tasks; prevention, control and mitigation of natural disasters and epidemics; reviewing use of the local government budget provisions and financial reserves (if any) until June 30, 2018.

9. Reviewing allocation and decentralization of state budget expenditures financed by land use fees for investment in infrastructure facilities at local jurisdictions, cadastral surveying and documentation, and conferral of the land use right certificate.

10. Reviewing borrowing and loan repayment of the local government budget as follows:

a) Evaluating the opening debt balance, the amount of borrowed funds until June 30, 2018, the projected amount of loans in the whole year, detailing loans classified by borrowing objectives (including loans used for repaying principal and compensating for deficit spending) and specific funding sources (including funding obtained from issuance of local government bonds, the Government’s on-lending of foreign borrowed funds classified by specific sponsors, programs and projects; borrowing of state-owned capital credit funds; borrowing of state treasury s available funds and borrowing of other funds).

b) Reviewing repayment of debts (including interest and fees) until June 30, 2018 with respective details about the aforesaid funding sources.

c) Reviewing repayment of loan principal with respective details about specific funding sources (including newly borrowed capital used for repaying previous debts, funding obtained from surplus revenues, increased revenues or expenditure savings).

d) Evaluating the closing debt balance based on the plan and projection with respective details about the aforesaid funding sources.

11. Reviewing budget revenues and expenditures which are derived from lottery sales in 2018 and accumulated during the three-year period of 2016 - 2018; use of revenues generated from lottery businesses investments in important social welfare facilities at local jurisdictions, especially those in the educational and healthcare field, and agricultural ones at rural areas as per regulations in force which exist in 2018 and accumulated during the three-year period of 2016 – 2018.

12. Reviewing implementation of national target programs, target programs, other programs or projects financed by foreign funding sources as follows: reviewing implementation in 2018 and accumulation of implementation for the 2016 - 2018 period compared with the five-year plan for implementation of assigned programs and projects for the period of 2016 – 2020 (if any) or according to respective decisions on approval of programs, projects or assignments. This review should focus on the followings:

a) With respect to the review of implementation of national target programs for construction of new rural areas, reviewing the budget for such implementation with respective details about specific funding sources (e.g. the central budget allocations, specifically including funding derived from government bonds; local government budget expenditures and other mobilized capital), the number of communes that fulfill specified program objectives; in case of local government budget allocations and other mobilized capital which are less than expected, clarifying causes and liabilities of entities concerned.

a) With respect to the review of implementation of national target programs for sustainable poverty reduction, reviewing the budget for such implementation with respective details about specific funding sources (e.g. the central budget allocations, specifically including funding derived from government bonds; local government budget expenditures and other mobilized capital; in case of local government budget allocations and other mobilized capital which are less than expected, clarifying causes and liabilities of entities concerned.

c) With respect to the review of implementation of target programs, reviewing the budget for such implementation with respective details about specific funding sources (e.g. the central budget allocations, specifically including funding derived from government bonds; local government budget expenditures and other mobilized capital; in case of local government budget allocations and other mobilized capital which are less than expected, clarifying causes and liabilities of entities concerned.

d) In case where local jurisdictions obtain foreign funding for implementation of national target programs, target programs, other programs or projects, it shall be required to prepare a detailed report on budget allocations, distribution and disbursement of these allocations, types of ODA funds (ODA grants or loans) and preferential loans.

Chapter II

ESTABLISHMENT OF THE STATE BUDGET ESTIMATE FOR 2019

Article 9. Requirements

1. Since 2019 is marked as the year of uniform implementation of Resolutions of the XIIthCentral Executive Committee; ongoing implementation of the Resolution No. 07-NQ/TW; and is the fourth year of implementation of the Resolution No. 142/2016/QH13, the Resolution No. 25/2016/QH14 and the Resolution No. 26/2016/QH14, it plays an important role in striving for the state budget’s socio-economic and financial objectives for the five-year period of 2016 – 2020.

2. The 2019’s state budget estimate is established in compliance with the Law on State Budget and Law-guiding documents on processes, time limit, interpretation of legal bases, computing bases and explanations; to ensure relevance to the implementation schedule by end of December 31, 2018, and objectives and assignments defined in the approved five-year plan for the 2016 – 2020 period; to correspond to the orientation towards development, objectives and assignments specified in 2019 under the Prime Minister’s directions.

3. Establishment of the estimate of state budget revenues and expenditures in 2019 shall be expected to observe legislative regulations on management of budget revenues and expenditures; adhere to principles, standards and norms of distribution of the state budget; strictly follow the guideline for absolute frugality and anti-extravagance at the stage of establishment of the budget estimate.

4. Ministries, central agencies and local jurisdictions shall rely on an evaluation of implementation of socio-economic development tasks in 2018 and cumulative implementation thereof during the three-year period of 2016 – 2018, stick to socio-economic development objectives and tasks of specific industries, sectors and local jurisdictions in 2019 and for the 2016 – 2020 period, the midterm public investment plan for the 2016 – 2020 period so as to define key and significant tasks to be performed in 2019 in alignment with budget restructuring objectives for the 2016 – 2020 period under the Resolution No. 07-NQ/TW, the Resolution No. 25/2016/QH14, and to implement the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW; take initiative in deciding the priority order of expenditure assignments, programs and projects which have already been approved by taking into account such factors as the degree of significance, necessity and possibility of implementation in 2019 based on the amount of state budget allocations and other legally mobilized funding sources.

5. When establishing their budget estimate, ministries, centrally-governed sectoral administrations should consider carrying out a general review of regulations and policies (especially social welfare policies) for revoking or integrating, within appropriate jurisdiction, or for revoking or integrating, by submitting a request to competent authorities, policies that overlap each other, repeat and show their ineffectiveness; avoiding proposing policies that may cause a reduction in state budget revenues; adopting policies that may increase state budget expenditures only to the extent that they are really needed and there are funding sources available to be used as these expenditures; taking initiative in estimating and providing the adequate amount of funding for implementation of new policies, regulations and assignments which have already been approved by competent authorities.

Article 10. Establishment of the state budget revenue estimate

The state budget revenue estimate for 2019 must be formulated in accordance with current policies and regimes on the basis of a close examination of possibilities of implementing state budget revenue assignments in 2018. In addition to the estimate, it shall be necessary to provide an analysis and forecast of domestic and international macroeconomic situations, especially the factors that may cause any change in the situation of investment, production - business development, trade, import and export activities in 2019; measure specific factors causing any increase or decrease in state budget revenues due to possible changes in the law on tax collection and implementation of the roadmap for tax reduction in order to implement commitments on international economic integration; ensure possible implementation of measures to reform and modernize the collection management, promote use of electronic invoices, inspection, examination and prevention of revenue loss, smuggling, trade frauds, strict management of taxable prices, detect and prevent transfer pricing abuse and tax evasion; enhance handling of outstanding tax debts; review receipts from the investment projects for which incentives expire.

It is expected that the proportion of mobilization of funds from taxes and fees to GDP in 2019 will be approximately 21%.

It shall be projected that the national average domestic revenue (exclusive of revenues obtained from crude oil, land use fees, lottery sales and those obtained from sale of state capital invested in enterprises, dividends and after-tax profits) in 2019 will rise by the minimum rate of 12-14% compared to that estimated in 2018. The specific amount by which it increases shall vary depending on conditions, characteristics of, and shall be commensurate with, the economic growth rate.

It shall be expected that the average revenue obtained from import and export activities will rise at the minimum rate of 4-6% compared to that estimated in 2018.

1. Establishment of the domestic revenue estimate:

a) Upon formulating the state budget revenue estimate in 2019, local jurisdictions shall, apart from having to satisfy the above-mentioned objectives and requirements, clearly define revenues falling inside and outside the scope of State budget revenue on the basis of which they need to make an overall report on funding sources from which state budget revenues are obtained within the remit of these local jurisdictions (including the amount of budget revenues arising at communes, wards, townships, tax amounts collected from foreign or domestic contractors while they are executing investment projects within these areas, taxes collected from new projects put into operation).

The domestic revenue estimate shall be established on the basis of the full assessment of the actual implementation in 2017, the socio-economic development plan for the 2016-2020 period, demands for striving and capacity for carrying out socio-economic and state budget assignments in 2018, the accumulated number of revenues implemented during the three-year period from 2016 to 2018; the forecast of the economic growth in specific local jurisdictions in 2019 and the number of revenues that are determined after the audit of the state budget revenue estimate in 2019 and informed by competent authorities.

b) The state budget revenue estimate for 2019 must be established on the basis of the taxpayers data system; ensuring accurate and sufficient determination of the amount of specific revenues, taxes and collection sectors for each local jurisdiction and provide details about revenues from factories newly brought into operation that generate a large number of revenues in accordance with current regulations on taxes, fees, charges and other state budget revenues; regulations on policy adjustments according to the specified schedule that may continue to affect the amount of state budget revenues in 2019, and regulations expected to be amended, supplemented or applied in 2019; with particular attention paid to the Law on Amending and Supplementing a Number of Articles of the Law on Special Consumption Tax in which special consumption tax rates applied to cigarettes, cigars and other tobacco products are bound to rise.

c) The domestic revenue estimate must consolidate all of revenues obtained from grant of the right of natural resource mining and water resource extraction (including the amount of revenues arising from the mining license issued by either a central body or a provincial People’s Committee); revenues obtained from administrative fines, other forms of penalty or confiscation as prescribed by laws which are imposed by central or local state agencies.

d) The estimate of state budget revenues obtained by collecting land use fees and land rents must be established based on the plan for auction of the land use right in accordance with law on land; must take into account the estimate of revenues obtained from reorganization and disposal of real property of entities, organizations, units or enterprises under the Law on Management and Use of public assets and other guiding documents thereof; all of revenues obtained from reorganization and disposal of public assets (including building and land), and the amount of revenues from operation of infrastructure facilities (after related costs are taken away) that have to be remitted to the state budget and are given priority to enter in the estimate of state budget expenditures for investment and development purposes in accordance with regulations in force.

dd) Ministries, central and local state agencies must take into account sources of revenues associated with promotion of implementation of encouragement and enforcement measures for collection of tax debts, inspection, examination and control of transfer pricing abuse, smuggling, trade frauds, inspection and supervision of VAT refunds, further supervision, management and prevention of revenue loss of trading and service business enterprises and individuals under the direction of the Government, the Prime Minister and the Ministry of Finance; sources of revenues from stimulation of implementation of recommendations by the auditing body, the Government’s inspectorate, regulatory authorities, and the amount of taxes retrospectively collected, refunded or the amount of tax debts expected to be recovered and remitted to the state budget.

e) With respect to revenues obtained from fees and charges paid to the state budget, and retained for use as expenditures in accordance with regulations in force, ministries, central and local authorities must estimate the amount of fees and charges to be earned in 2018, anticipate factors that may affect the amount of state budget revenues in 2019 to make a projection which is appropriate, positive and contains details about specific fees and charges (making a detailed estimate of total revenue and the amount of revenues retained as expenditures according to regulations specific to respective spending sectors, and the amount of revenues remitted to the state budget under the Law on State Budget and other relevant guiding documents), but only the part of revenue remitted to the state budget as prescribed by law is included in the estimate.

g) With respect to state budget revenues from collection of student’s school fees, medical service costs and public service charges (not belonging in the list of fees and charges prescribed by the Law on Fees and Charges), they shall not be assumed as state budget revenues and expenditures allocated or decentralized to ministries, central and local regulatory authorities, but must be represented in a separate state budget estimate. It shall be necessary to prepare a plan for use of these amounts to competent authorities as stipulated by law. Ministries, local and central regulatory authorities shall continue to provide the mechanism for supplementing the state budget with the abovementioned and other sources of revenues retained as expenditures for implementation of employee pay reform policies in accordance with applicable regulations.

2. Establishment of the estimate of state budget revenues from export and import activities:

a) This estimate of state budget revenues shall be formulated, based on the forecast of the growth rate of dutiable commodity and service export and import turnovers in the context of economic integration, strengthening of trade promotion activities, reinforcement and expansion of export markets; based on the shift in the commodity structure, especially traditional commodities from which a large part of state budget revenues is obtained and other ones from which state budget revenues have been obtained recently.

b) This estimate of state budget revenues shall be established by taking into consideration such influencing factors as the forecast of any fluctuation in domestic and international market prices of commodities generating a large amount of revenues; the exchange rate between Vietnamese dong and currencies of strategic trade partners; the reduction in revenues caused by application of special preferential tax rates or implementation of the schedule of tariff cuts under free trade agreements which have already been in effect and commitments entered into in 2019; the degree of trade facilitation and effects of technical barriers to trade; the scale and progress of implementation of key investment projects in which input materials and equipment, etc. are imported.

3. Establishment of the estimate of the amount of VAT refunds arising under the provisions of the VAT Law:

In order to ensure accurate, full and timely determination of VAT refunds arising in a local jurisdiction according to existing policies and regulations, and those coming into effect recently, this state budget estimate must be established, based on socio-economic situations and capability of developing business and production activities carried out in a local jurisdiction, especially at exporting enterprises regularly claiming their VAT refunds and those developing investment projects. The estimate of VAT refunds must stick to requirements concerning strengthening of management of tax refunds, supervision and inspection before and after payment of VAT refunds.

4. Establishment of the estimate of state budget revenues from non-refundable aids:

Based on ODA grant and foreign non-governmental aid agreements and arrangements which have already been entered into, and the progress on implementation and disbursement of funds for implementation of programs and projects using foreign aids or grants within a first six-month period of 2018 and till the end of 2018, Ministries, central and local regulatory authorities shall provide an estimate of state budget revenues from non-refundable aids in 2019 in uniformity with agreements and arrangements currently in effect and in alignment with the reality.

Ministries, central and local regulatory authorities shall only be entitled to spend revenues from non-refundable aids so long as the estimate of state budget revenues is available. Where grants or aids arise after the time of representation of the estimate, they must report to the Ministry of Planning and Investment (with respect to grants or aids used as capital expenditures) or the Ministry of Finance (with respect to grants or aids used as recurrent expenditures) before a consolidated report is prepared for submission to the Government and then represented to the National Assembly Standing Committee to seek its approval of supplementing the estimated of state budget revenues as the basis for supplementing the estimate of state budget expenditures in accordance with regulations in force.

Article 11. Establishment of the state budget expenditure estimate

1. Establishment of the estimate of capital expenditures:

a) The estimate of capital expenditures financed by the state budget s funding sources (including ODA capital, preferential loans, grants, aids, government bonds, lottery income, revenues obtained from sale of state capital invested in certain enterprises and land use fees) shall be established to satisfy socio-economic development objectives and assignments in 2019, the five-year socio-economic development plan for the period of 2016 – 2020 and the national five-year financial plan for the period of 2016 – 2020 under the Resolution No. 25/2016/QH14, the Resolution No. 1023/NQ-UBTVQH13 dated August 28, 2015 of the National Assembly Standing Committee, and the Prime Minister’s Decision No. 40/2015/QD-TTg dated September 14, 2015 on principles, standards and norms of distribution of the state budget’s capital expenditures for the period of 2016 – 2020; must ensure that total amount of the central budget’s annual subsidies granted as capital expenditures to the local government budget for implementation of certain major and extremely important programs and projects that may have great effects on socio-economic development of a local jurisdiction will not exceed 30% of total amount of the central budget’s capital expenditures.

Based on the progress in implementing the three-year plan for the 2016 – 2018 period, it shall be required to establish the estimate of capital expenditures in 2019, make a proposal to adapt the midterm public investment plan (where necessary) to the reality and requirements concerning socio-economic development objectives of ministries, central bodies and local entities or authorities, but ensure that the adjusted budget must fall within total decentralized or approved amount of state budget allocations.

b) The estimate of the state budget’s capital expenditures should be formulated in detail according to the spending sectors in line with the provisions of the State Budget Law and arrange the projects in order of priority by means of: (i) providing a full amount of funding in stages of implementation of national target programs and target programs, speeding up the progress and completion of important national projects and projects of great significance for socio-economic development; (ii) allocating adequate counterpart funds for projects using ODA funds and preferential loans granted by foreign sponsors, state capital invested in projects in the PPP form, handling outstanding capital construction debts and recovering advance capital; (iii) funding newly opened projects if the funding source is available and investment procedures are sufficient as legally prescribed.

c) Ministries, central agencies, local entities and units which are permitted by competent authorities to use revenues from rearrangement and disposal of real property under the state ownership for investment purposes must establish the estimated of capital expenditures financed by these revenues (including the estimated amount of revenues in 2018 not yet used up) and include them in the general report on the estimate of capital expenditures of ministries, central bodies, local entities and units for submission to a planning and investment body and a financial body at the same level to prepare a state budget estimate represented to the decision-making authority.

In addition, ministries and central agencies shall be responsible for preparing separate reports on revenues and demands for capital expenditures financed by revenues from sale of assets, even including revenues from fees for use of land and land-attached property for submission to the Ministry of Finance (for the attention of the Department of national defence and security finance, especially with regard to the Ministry of National Defence and the Ministry of Public Security; the Public Asset Management Authority with regard to ministries and other central entities).

d) The estimate of expenditures for offsetting the interest rate difference or supplementing funding sources for implementation of preferential credit programs shall be formulated in accordance with applicable regulations, based on the regulations of competent authorities, the situation of implementation in 2018 and the forecast of changes in spending subjects, policies and tasks in 2019.

dd) The planning shall be carried out under the provisions of the Law on Planning dated November 24, 2017 and the Government’s Resolution No. 11/NQ-CP dated February 5, 2018 on enforcement of the Law on Planning.

2. Establishment of the estimate of state budget expenditures for national reserves:

According to the National Reserve Development Strategy by 2020, national reserve objectives, the state budget balancing capability and the socio-economic situation forecast, the forecast of demands for aids and grants, ministries and central agencies assigned to manage national reserve goods shall set up the plan and estimate of expenditures on national reserve goods for 2019 that focus on strategic and essential goods, and prioritize national reserve commodities used for prevention, control and mitigation of consequences of natural calamities, epidemics, and maintenance of national defense and security.

3. Establishment of the estimate of recurrent expenditures:

a) Ministries, central agencies and local jurisdictions shall, based on political tasks and socio-economic development plans in 2019 and the estimated number of budget revenue and expenditure in 2019, make the estimate of recurrent expenditures specific to spending sectors in line with objectives and assignments defined in 2019, and ensure compliance with the policies, regimes and norms of state budget expenditures, and fulfillment of important political tasks, and strict compliance with the policies and regulations issued by the State, including multidimensional poverty policies as approved by competent authorities.

Ministries, central and local agencies, entities or units using state budget expenditures shall make an estimate of recurrent expenditures to ensure correct sectors, characteristics of the funding source and absolute thrift. The estimate of expenditures on procurement, maintenance and repair of assets must be based on regulations on norms, norms and regimes of management and use of state property according to regulations in force; restrict the public procurement of motor vehicles and expensive equipment, spread application of the regime for provision of advance lump-sum funding for use of public motor vehicles; minimize the number of conferences, festivals, seminars and overseas business trips; promote administrative reforms to create a modern administrative system in association with the fourth technology revolution.

Ministries, local and central agencies shall make the estimate of the budget for repair, improvement, maintenance, refurbishment and expansion of facilities, subject to directive documents of the Ministry of Finance.

They shall make the estimate of state budget expenditures on performance of the tasks of inspecting, testing and destroying unsafe food, expenses for inspection, prevention and control of smuggling, trade frauds and fake goods in the field of food hygiene and safety, and the estimate of the budget for rewarding organizations and individuals that gain excellent achievements in the management and participation in protection of food safety.

b) The estimate of expenditures on activities of state regulatory authorities, the Party and mass organizations shall be made in conformity with the objectives and tasks of downsizing of organizations in the political system according to the Conclusion No.17-KL/TW; the operational review and reorganization in accordance with the Resolution No. 18-NQ/TW elaborating on the implementation of specific objectives and tasks in 2019; must define the amount of funding intended for implementation of the objectives and tasks in 2019:

- Establishment of such estimate shall be subject to the Resolution No. 18-NQ/TW prescribing the following tasks and objectives: (i) reorganizing and fortifying certain organizations and internal focal points thereof with a view to reducing these pivots, minimize intermediate entities and deputies; amending, supplementing and perfecting several regulations related to functions, roles and designing the organizational structure to deal with overlapping and repetition of functions, roles and sectors of management; (ii) reforming the organizational structure and applying dual office holding regimes to reduce focal points, improve efficiency and effectiveness of operations; (iii) logically arranging and simplifying commune-level administrative units that have not yet satisfied 50% of standards in accordance with regulations on the size of population, geographical areas, and decreasing the number of villages and residential neighborhoods.

- Establishment of that estimate shall be subject to the Resolution No. 39-NQ/TW stipulating downsizing; the notification of conclusion No. 30-TB/TW dated May 23, 2017 on results of inspection of implementation of the Resolution No. 39-NQ/TW of the Politburo; the Conclusion No. 17-KL/TW; the Official Dispatch No.5470/BNV-TCBC dated October 13, 2017 of the Ministry of Home Affairs in which the number of staff members subject to downsizing in 2019 is assumed as the minimum rate of staff members which are decreased per year with respect to specific respective groups of entities.

It shall include a projection of budget allocations granted to administrative entities affected by reductions in expenditures on staff, operational machinery and facilities, etc.; a projection of demands for expenditures on implementation of policies on downsizing under applicable regimes and policies.

c) The estimate of state budget expenditures on activities of public sector units shall be formulated on the basis of the progress of implementation thereof during the period of 2016 - 2018; the objectives and tasks of downsizing of organizations in the political system as per the Conclusion No.17-KL/TW; the objectives of reform of public sector units according to the Resolution No. 19-NQ/TW, the Resolution No.10/NQ-CP and the Decree No. 16/2015/ND-CP; shall be inclusive of details about implementation of specific objectives and tasks in 2019; shall define the amount by which the budget estimate is decreased in connection with implementation of objectives and assignments in 2019. This estimate shall be based on the following tasks:

- The downsizing subject to the Conclusion No. 17-KL/TW in which the number of staff members subject to downsizing in 2019 is defined asthe minimum rate of staff members which are decreased per yearwith respect to specific respective groups of entities.

- Reform of management and financial mechanism, and reorganization of public sector agencies (promulgation of regulatory documents stipulated in the Decree No. 16/2015/ND-CP and the Decision No.695/QD -TTg dated May 21, 2015 of the Prime Minister on issuing the plan for the implementation of the Decree No. 16/2015/ND-CP).

- Reduction of focal points of public sectors entities; reduction of the number of illegal employment contracts existing in public sector agencies (except those granted financial autonomy).

- Roadmap for determination of public service prices and fees (determination of a full amount of salaries, direct costs, managerial and asset depreciation costs) with regard to several basic sectors such as healthcare, education – training and vocational education sectors. Based on that roadmap, the number of units granted autonomy over all of capital and recurrent expenditures, or over all of recurrent expenditures shall be increased; the level of financial autonomy granted to the rest of public sector units shall be increased.

It shall be necessary to estimate state budget expenditures on implementation of specific objectives, include details about any reduction in expenditures on personnel and operational machinery, and any reduction in expenditures associated with the roadmap for price escalation, fees for public services and shift in groups of financially autonomous units, etc.; estimate the budget demands for implementation of downsizing policies under currently applicable regimes and policies.

- Transformation of public economic and other public sector units that conform to eligibility requirements for becoming a joint stock company (except hospitals or educational institutions).

d) Several further notes on establishment of the state budget estimate in 2019:

- With respect to expenditures on scientific and technological activities: Making an estimate of expenditures for scientific and technological tasks already approved by competent authorities and giving detailed explanations about tasks at the national, ministerial, provincial and grassroots level, recurrent and other non-recurrent tasks of scientific and technological organizations. Formulation of the estimate of expenditures for science and technology public units shall be subject to the Decree No. 54/2016/ND-CP and other documents providing guidance on implementation thereof.

- With respect to expenditures on education, training and vocational education activities: Making the interpretation of bases for establishment of the estimate of expenditures on implementation of policies on tuition fee exemption and reduction and support for academic expenses, policies on seniority allowances for teachers and preferential policies for teachers and educational officers in areas facing extremely underprivileged socio-economic difficulties.

- With respect to expenditures on health care, population and family planning activities: Giving detailed explanations on the bases for calculating the expenditures for implementation of programs and schemes of the health service; projecting the amount of budget for a decrease in allocation of recurrent expenditures of non-business health units according to the roadmap for adjusting the prices of medical services; estimating the demand for the adequate amount of state budget expenditures for payment of salaries and particular benefits which not yet included in the price of medical services and the benefit for fighting against epidemics as prescribed by law.

Anticipating effects on the state budget estimate in 2019 when implementing the Circular No. 02/2017/TT-BYT dated March 15, 2017 of the Ministry of Health prescribing the maximum level of the bracket of price of medical services that do not fall within the scope of coverage of the health insurance package provided by state-owned medical service providers and providing guidance on pricing and payment of medical service charges in certain cases.

- With respect to expenditures on economic activities: Making an estimate of such expenditures on the basis of the volume of tasks assigned by competent authorities and the prescribed regimes and levels of budget expenditures; concentrating on allocation of expenditures on performance of important tasks, including maintenance of key economic infrastructure systems (e.g. transport and irrigation facilities) in order to increase their useful life and investment efficiency, traffic safety assurance; emergency search and rescue; storage of national reserve goods; provision of the adequate amount of budget for planning; performance of agricultural, forestry, fishery and industrial extension activities; implementation of support policy for fishery development. Making an estimate of state budget expenditures for the state s commissioning and assignment of tasks to public non-business units under the provisions of the Decree No. 141/2016/ND-CP and the Circular No. 145/2017/TT-BTC dated December 29, 2017 of the Ministry of Finance guiding the financial mechanism of public private agencies as per Decree No. 141/2016/ND-CP.

- Proactively budgeting for the implementation of multidimensional poverty standards as approved by competent authorities and in the Government’s Resolutions;

- Budgeting for activities of state regulatory authorities, Party and mass organizations with detailed explanations on:

+ The number of staff members in 2019 (equal to the number of staff members permitted by competent authorities in 2018 minus (-) the number of staff members subject to downsizing carried out in 2019 according to the minimum reduction per year of staff members working for specific blocks of agencies and units prescribed in the Conclusion No. 17-KL/TW). This explanation should clarify the actual number of staff members available up to the time of budget estimation and the number of employees which have yet to be recruited in comparison with the approved manning requirements set out in 2018 (if any).

+ Determination of the package of salaries and allowances and contributions according to enforceable regulations (e.g. social insurance, health insurance, unemployment insurance contributions and union dues) based on the base pay rate of 1.39 million dong/month (that package is calculated for all 12 months), which shall be covered by the State Budget, including: (i) the amount of salaries paid to the actual number of staff members on the payroll until the budgeting time (within the approved payroll), which are calculated at the rate of pay specific to ranks, grades and positions; legally prescribed salary allowances and contributions (e.g. social insurance, unemployment insurance, health insurance contributions, and union dues); (ii) the package of salaries paid to staff members on the payroll that are approved but not yet recruited, based on the base pay rate of 1.39 million dong per month, wage coefficient of 2.34 per an employee and contributions as legally prescribed; (iii) the amount by which the salary package is reduced according to the schedule of implementation of the Conclusion No. 17-KL/TW.

+ Bases for formulation of the estimate of particular expenditures (e.g. legal bases, spending contents, levels and other related contents) in 2019 in a spirit of thrift and effectiveness.

- With regard to political, socio-professional organizations, social institutions and socio-professional institutions of which overheads are subsidized by the state budget, the state budget estimate in 2019 shall be made on the basis of an increase and reduction in tasks assigned by competent authorities in 2019.

4. Sector or industry ministries shall, in addition to formulation of the estimate of state budget revenues and expenditures for 2019 (directly carried out by ministries), need to make an accurate projection of the budget demand for implementation of mechanisms and policies adopted by competent authorities and in force in 2019, enclosing with specific explanatory notes on bases for such projection.

5. Formulation of the estimate of state budget expenditures on implementation of national target programs and target programs:

a) With respect to national target programs and target programs which have already been approved:

Based on the objectives and tasks of each program, total amount of capital and budget which have already been approved, the cumulative results of implementation thereof during the period of 2016 – 2018, the decentralized medium-term plan (if any) and the amount inspected in 2019, the Prime Minister’s Decision No. 48/2016/QD-TTg dated October 31, 2016 stipulating the principles, criteria and norms of the central budget’s allocations and the rate of the local government budget’s counterpart funds used for implementing national target programs on sustainable poverty reduction for the period of 2016 – 2020, the Prime Minister’s Decision No. 12/2017/QD-TTg dated April 22, 2017 promulgating regulations on principles, criteria and norms of the central budget’s allocations and the rate of the local government budget’s counterpart funds for implementation of the national target program on building new rural areas in the 2016-2020 period, ministries and central agencies authorized to be the host of a national target program or target program shall instruct ministries, central agencies and local authorities to make an estimate of capital and funds for implementation in conformity with objectives and assignments defined in respective programs.

Ministries, central agencies and local authorities shall, based on the tasks assigned in the decision on approval of each national target program or target program, and the additional guidance of the program owner, prepare an estimate of expenditures for implementation of programs that elaborates on sources of capital, projects, contents, tasks, non-business funding, investment capital, the central budget’s funding sources, the local government budget’s counterpart fund and foreign capital sources (if any), for submission to the Ministry of Planning and Investment, the Ministry of Finance and the host institution of the program in accordance with regulations in force.

The host institutions of national target programs or target programs shall prepare a consolidated estimate with proposals for capital or budget for implementation of national target programs or target programs for submission to the Ministry of Planning and Investment and the Ministry of Finance.

Such estimate should enclose detailed explanations about indicators, tasks, principles, standards and norms of allocations for each project and assignment.

b) With respect to target programs which have yet to obtain the approval decision:

Pursuant to the Government s Resolution No. 73/NQ-CP dated August 26, 2016 granting an approval of the investment policy on target programs for the 2016-2020 period, the Decision on state budget allocations for implementation of the medium-term investment plan for the period from 2016 to 2020, and the proposal and the progress in approval of target programs, host institutions of target programs shall instruct ministries, central and local agencies implementing programs to make an estimate of state budget expenditures for target programs for 2019 in accordance with regulations in force. With regard to the budget estimate for public sector activities, host institutions of target programs shall review requirements and tasks for making the budget estimate in line with estimated investment allocations for these programs.

Ministries, central agencies and local authorities shall, based on instructions of host institutions, prepare an estimate of expenditures for implementation of programs and provide details relevant to sources of capital, projects, contents, tasks, non-business funding, investment capital, the central budget’s funding sources, the local government budget’s counterpart fund and foreign capital sources (if any), for submission to the Ministry of Planning and Investment, the Ministry of Finance and host institutions in accordance with regulations in force.

The host institutions of target programs shall prepare a consolidated estimate of the budget for implementation of these target programs for submission to the Ministry of Planning and Investment, and the Ministry of Finance, enclosing detailed explanations about indices, tasks, principles, criteria and norms of allocation of investment and non-business expenditures for specific projects and assignments.

6. With regard to programs and projects using ODA funding sources (including loans and aids), preferential loans and foreign non-governmental aids:

a) Pursuant to the provisions of the State Budget Law, the Law on Public Investment and the Law on Public Debt Management which are amended and other guiding documents, and agreements already entered into with sponsors, cumulative results of implementation of the state budget for the 2016-2018 period; capability of implementing projects in 2019 and capability of funding within the limit of foreign funds in the medium-term public investment plan for the 2016-2020 period; based on mechanisms for financing programs and projects, ministries, central agencies and local authorities shall make a budget estimate for implementation of programs and projects using foreign capital, providing details of foreign loans (including ODA loans and preferential loans), aids and counterpart fund; classifying state budget expenditures into capital and non-business expenditures; prioritizing a full amount of budget allocations for projects upon termination of agreements within the budgetary year; allowing new programs and projects to be implemented only if they are effective and compatible with the disbursement capability under Agreements already effected and the Prime Minister’s approval decisions.

Ministries, central agencies and local authorities shall not propose signing of agreements on new loans used as recurrent expenditures.

b) With respect to programs and projects using both state budget allocations and on-lent capital, entities assigned to manage programs or projects shall be obliged to provide guidance on formulation and consolidation of estimates of separate capital groups.

c) With respect to programs and projects in which several ministries, central agencies and local authorities participate together, ministries, central agencies and local authorities shall prepare an estimate of expenditures financed by overseas funding sources for submission to host institutions of programs and projects that proceed with preparing reports with explanatory notes on bases for state budget allocations for submission to the Ministry of Finance, and the Ministry of Planning and Investment, before such report is consolidated into a general report submitted to competent authorities to seek their approval decision.

d) With respect to umbrella programs and projects, host institutions of component projects shall be responsible for preparing the detailed budget estimate for implementation of component projects for submission to host institutions of programs and projects that proceed with making a consolidated report submitted to the Ministry of Planning and Investment and the Ministry of Finance, including details relevant to sources of funding and assignments the same as other normal programs or projects, and relevant to ministries, central and local authorities.

dd) The amount of expenditures financed by foreign capital sources which are estimated must be relevant, adequate and fall within the limit prescribed in the five-year national medium-term public investment plan and the five-year national financial plan.

e) If ministries, sectoral administrations and local authorities judge that there is a possibility that fund disbursements for currently executed projects fail to meet or exceed the amount specified in the decentralized midterm budget; or there are projects in which the policy for investment has been approved and agreements or arrangements for loans used for investment have been signed, and for which disbursements are possible in the period of 2019 - 2020, but have not yet been included in the midterm budget for the period of 2016 - 2020, they shall make a detailed report to consider adjusting the midterm budget policy with respect to total loan limit (even including domestic and overseas loans) defined in the midterm plan approved by competent authorities.

7. Establishment of the estimate of the budget for pay reform in 2019:

a) Ministries, central agencies shall cut 10% of the increased amount of estimated recurrent expenditures (exclusive of salaries, salary-related allowances, salary-equivalent amounts and personnel expenditures defined in prescribed regimes), and take initiative in arranging recurrent spending assignments, a portion of revenues retained according to stipulated regimes, and funding for pay reform which remains in the previous year;

b) Local authorities shall continue to implement the mechanism for cutting 10% of the amount of recurrent expenditures (exclusive of salaries, salary-related allowances, salary-equivalent amounts and personnel expenditures defined in prescribed regimes); 50% of the increased amount of local government budget revenues (except revenues from land use fees and lottery income); a portion of revenues retained according to the prescribed regime of entities and units; cutting the funding for pay reform which remains in the previous year;

c) The estimate of recurrent expenditures for pay reform shall be associated with implementation of the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW with details relevant to specific Resolutions and objectives, including those used for reorganization of operational apparatus, downsizing and elevation of autonomy granted public sector units, based on adjustments to public service prices and fees under the provisions of the Decree No. 16/2015/ND-CP and Decrees of the Government that prescribe autonomy of public non-business units in specific sectors.

8. Preparation of state budget provisions

The central budget and local government budget at all levels shall determine budget provisions in accordance with the Law on State Budget in order to actively respond to natural calamities, floods, epidemics, and carry out important and urgent tasks arising out of the budget estimate.

9. Estimation of state budget revenues retained as expenditures in accordance with applicable regulations:

Ministries, central agencies and local authorities shall make their estimates of state budget revenues retained as expenditures to report to competent authorities according to the form given in the Circular No. 342/2016/TT-BTC dated December 30, 2016. of the Ministry of Finance elaborating and providing guidance on implementation of a number of articles of Decree No. 163/2016/ND-CP, which are not included in estimates of budget expenditures of ministries, central agencies and local authorities.

10. Based on the audited amount of state budget revenues and expenditures in 2019, ministries, central agencies and local authorities shall make coherent and detailed estimates of expenditures relevant to specific sectors as prescribed in the State Budget Law, tasks and affiliated budgetary units; after working with the Ministry of Finance, the Ministry of Planning and Investment, ministries, central agencies, provinces and centrally-governed cities (in case of applying for permission) shall promptly establish the plan for distribution of the estimated budget in 2019 of their own in order to authorize and take initiative in requesting competent authorities to make their decision on budget distributions relevant to specific sectors, and decentralize the budget to budgetary units ahead of December 31, 2018 in accordance with the Law on State Budget.

Article 12. Preparation of financial statements of state off-budget financial funds

Ministries, central agencies and local entities or units authorized to manage off-budget financial funds shall prepare financial statements in 2018 and formulate the 2019 financial plan of state off-budget financial funds within their jurisdiction, enclosing the report on the 2019 state budget estimate of their own, for submission to financial authorities at the same level under the provisions of the Law on State Budget and other relevant guiding documents.

Article 13. Establishment of the local government budget estimate

The estimate of local government budget revenues and expenditures for 2019 shall be formulated in close alignment with national and local socio-economic development objectives and assignments in 2019 and for the period of 2016 - 2020, the national five-year financial plan and the midterm public investment plan for the period of 2016 – 2020; shall include decentralization of sources of revenues and spending assignments under the provisions of the Law on State Budget and other relevant guiding documents; shall conform to state budget expenditure regimes and policies, and ensure sufficient resources for implementation of policies and regulations already enacted by the central government and compliance with provisions laid down in the Law on State Budget.

In addition to regulations on general guidelines for formulation of the state budget estimate, formulation of the local government budget estimate shall take into consideration the followings:

1. Establishment of the estimate of state budget revenues within local jurisdictions:

Local authorities shall formulate their budget estimates on the basis of aggregating all revenues from taxes, charges, fees and other revenues within respective local jurisdictions as provided in Article 7 of the State Budget Law and other relevant laws.

People’s Committees of provinces and cities shall direct their subsidiary finance, taxation, customs authorities and liaise with other relevant authorities to strictly comply with the regulatory requirement concerning formulation of budget revenues, and shall be held accountable to the Prime Minister for formulation of the state budget revenue estimate.

People’s Councils and People’s Committees of provinces and cities shall review and make an estimate of state budget revenues which presents a positive view, is aligned with the reality, aggregates all revenues recently arising within respective local jurisdictions in order to determine a correct and full amount of revenues, not save spaces in order for local authorities to make their own attempt in collecting revenues; shall adopt revenue norms defined in the ordinance on collection of state budget revenues under the decision of the National Assembly and the decentralization of the Prime Minister as the basis for direction and administration of implementation of budget collection assignments within respective local jurisdictions.

2. Regarding formulation of the local government budget expenditure estimate, People’s Committees at all levels shall take initiative in:

Establishing the estimate of local government budget expenditures based on sources of local government budget revenues that a local jurisdiction is granted under its decentralized authority and at the percent of distribution between central budget revenues and local government budget revenues, the supplementary amount of central budget revenues allocated to the local government budget decentralized in 2018; objectives defined in the socio-economic development plan for the period of 2016 – 2020, socio-economic development objectives and assignments in 2019 of corresponding local jurisdictions; based on the projection for implementation of local government’s budget collection – spending assignments in 2018 and accumulation of implementation thereof during the three-year period of 2016 – 2018, the detailed estimate of local government budget expenditures specific to spending sectors shall be established under the Law on State Budget, ensure priority given to allocation of estimated expenditures on implementation of promised projects and tasks, and policies or regulations already in effect;

Local authorities shall make a detailed report on demands, resources and funding, whether surplus or deficient, to implement new policies or on increases in the amount of expenditures and extension of beneficiaries of policies in force in 2018 and demands in 2019 in accordance with enforceable regulations, which is assumed as a basis for allocation of supplementary target expenditures from the central budget to the local government budget according to the principles provided in the Decision No. 579/QD-TTg.

They shall be obliged to perform the following main tasks:

a) With regard to the estimate of capital expenditures, local jurisdictions shall establish that estimate based on provisions laid down in the Law on Public Investment, the midterm public investment plan for the period of 2016 – 2020, and the cumulative spending tasks performed during the period of 2016 – 2018; make the estimate of capital expenditures financed by local government budget revenues, subject to the Prime Minister’s Decision No. 40/2015/QD-TTg dated September 14, 2015 that issues the principles, criteria and norms of distribution of capital funds derived from state budget allocations for the period of 2016 - 2020 and depending on the capability of the local government budget over the period of budgetary stabilization.

In case where the accumulated amount of capital expenditures already used in 2016 - 2018 and the amount of capital expenditures expected in 2019, all of which are derived from the local government budget balance, are greater than the midterm capital expenditure budget for the period of 2016 - 2020 of a local jurisdiction, the competent authority over that local jurisdiction shall make a detailed report on the increased sources of revenues used as capital expenditures compared with the midterm public investment plan, propose any adjustment to the midterm public investment plan of the local jurisdiction, provide details about budget allocations increased in comparison to the amount specified in the midterm public investment plan for implementation of investment programs and projects; on handling of capital construction debts accrued; on recovery of advances.

With respect to capital expenditures financed by borrowed funds (including domestic and foreign ones), the proposal for any adjustment to the midterm public investment plan must ensure that the adjusted investment budget does not exceed total midterm borrowed fund which has been assigned.

b) With respect to funding for defense zone drills, local jurisdictions shall consult the plan for defense zone drills approved by the Ministry of National Defense or a Military Zone to make an estimate of state budget expenditures with details about specific drills and shall take initiative in using funds derived from the local government budget to implement that plan, and shall be entitled to receive the central budget’s subsidies only to the extent that they face difficulties and fail to balance their own budget.

c) Local jurisdictions shall provide an adequate amount of counterpart funds for ODA projects within their remit; take initiative in calculating and providing funds for completely handling all of capital construction debts and outstanding loan debts payable by the local government budget by the repayment due date.

d) These local jurisdictions shall be responsible to estimate expenditures financed by land use fees for investment in socio-economic infrastructure projects, migration and resettlement projects, preparation of construction sites, target programs for new rural construction; take initiative in distributing expenditures to establish land development funds under the Government s Decree No. 43/2014/ND-CP dated May 15, 2014; use at least 10% of total receipt from land use fees and land rents for land surveying, registration, building of the database of cadastral dossiers and grant of land use right certificates under the guidance of the Prime Minister in the Directive No. 1474/CT-TTg dated August 24, 2011 and the Directive No. 05/CT-TTg dated April 4, 2013 (the central budget shall not provide additional subsidiaries for any local jurisdiction that fails to give 10% of their budget allocations).

dd) As for local government budget expenditures financed by lottery revenues:

Local jurisdictions shall estimate the proportion of these revenues in their estimate of local government budget revenues and use the whole amount as capital expenditure. In particular, the proportion of revenues obtained from lottery activities shall be at least 60% in provinces of the North, Central Coast and Central Highlands regions, at least 50% in provinces of the South East and Mekong River delta regions, all of which shall be decided by the provincial-level People s Councils to serve financial demands in education - training, vocational education and healthcare sectors.

Local jurisdictions shall be allowed to allocate 10% of the estimated revenues obtained from lottery business activities as supplementary funding for implementation of tasks defined in national target programs for new rural construction.

After allocating revenues for ensuring completion of investment projects in the abovementioned sectors as approved by competent authorities, local jurisdictions may allocate the remaining amount of funds for climate resilience projects and other important projects classified as subjects of investment specified by the local government budget.

e) As for the tasks of infrastructure investment and development under the Resolutions of the Politburo, the Prime Minister s Decisions, based on investment objectives, tasks and capital demands as already prescribed, past investment performance reported by end of 2017, measurement of the possibility of implementation in 2018, competent authorities of local jurisdictions may proactively anticipate and determine the number of tasks in 2019, and arrange and prepare the local government budget and other financial resources stipulated by applicable regulations for implementation of these tasks and gradually reduce financial dependency on the central budget s supplementary allocations.

g) With respect to the recurrent expenditure estimate, local jurisdictions shall cut the expenditure budget for state agencies and public sector units on the basis of the tasks of downsizing, apparatus reorganization and reform of public sector units in 2019 which are determined based on implementation results accumulated during the 2016-2018 period, the objectives of the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW, and particularly if the rate of public staff members subject to downsizing is defined as the minimum rate subject to the Conclusion No. 17-KL/TW, cutting the funding sources intended for implementation of pay reform in 2019 if funding sources specified in regulations currently in force are not sufficient, and shall subsidize beneficiaries of social welfares programs to enable them to have access to public services by adjusting service prices and fees.

Local jurisdictions shall work out the plan to allocate the amount by which regular expenditures are reduced directly to public medical service, education – training and vocational education agencies according to the roadmap for adjusting the prices of medical, educational - training and vocational training services in 2019 as regulated.

h) Local jurisdictions shall budget for implementation of multidimensional poverty standards as approved by competent authorities and in the Government’s Resolutions, with details about types of multidimensional poverty standards, the number of poor persons meeting such standards and the budget demands that may arise in 2019.

i) Local jurisdictions shall budget allocations given as grants and subsidies for extremely underprivileged socio-economic regions under the Prime Minister’s Decision No. 131/QD-TTg dated January 25, 2017 and the Prime Minister’s Decision No. 582/QD-TTg dated April 28, 2017.

k) Local jurisdictions shall make an estimate of expenditures for payment of outstanding interest, fees and other costs, arranging these expenditures as a separate portion of expenditures in the local government budget balance, ensuring a full and timely payment of outstanding debts due, and enclosing explanatory notes on payment amounts corresponding to specific borrowed funds (if any), including foreign borrowed funds that the Government on-lends to local jurisdictions, advances on the State Treasury’s funds, capital credit loans for fortification of irrigation canals and local government bond issues.

3. Projection about local government budget deficit/budget surplus, and planning for borrowing and repayment of principal of the local government budget:

Projection about local government budget deficit/surplus, and planning for borrowing and repayment of principal of the local government budget shall be subject to regulations laid down in the Law on State Budget and relevant guiding documents. Such projection and plan should take into consideration the following requirements:

a) The provincial-level budget of each local jurisdiction may be overspent only if regulations and conditions set out in the Law on State Budget and other relevant guiding documents are fully satisfied.

Based on the limit on outstanding public debts, capability of borrowing domestic funds and allocating funds for debt repayment, local jurisdictions shall propose total borrowing demand in 2019, including the demand for loans for offset against the provincial-level budget deficit (if any) and repayment of principal with priority given to overseas borrowed funds which have already been agreed upon and planned for disbursement in 2019. On such basis, the Ministry of Finance shall make an consolidated report and estimate of the state budget deficit in general, including the central budget deficit and the local government budget deficit, and the budget deficit of each local jurisdiction (if any), for submission to competent authorities to seek their consideration and decision.

With respect to local jurisdictions authorized to have budget deficit, they shall have to ensure that there is at least 60% of medium and long-term loans for offset against such budget deficit, and provide details corresponding to specific sources of borrowed funds as prescribed in point h clause 2 of this Article (if any).

b) Based on the amount of outstanding debts incurred by the local government budget which are estimated till December 31, 2018, the demand for receiving borrowed funds as capital expenditures in 2019 and the midterm capacity for repaying debts of the local government budget, local jurisdictions shall make a full assessment of effects of the local government budget’s debts before proposing and deciding on new loans, and shall ensure that the outstanding debt of each local jurisdiction does not exceed the maximum outstanding debt prescribed by law;

In case where the amount of the local government budget’s outstanding debts estimated till December 31, 2018 exceed the prescribed limit, in the 2019’s state budget estimate, local jurisdictions must allocate local government budget revenues that they receive upon budget decentralization, reduce the midterm public investment expenditure budget for the period of 2016 - 2020 in order to make up for the increased amount of expenditures on repayment of principal, and ensure the amount of outstanding debts does not exceed the outstanding debt limit of each local jurisdiction as provided by law.

In case where overseas borrowed funds that the Government on-lends to local jurisdictions, or other ones, are subject to binding requirements concerning purposes of such borrowed funds, local jurisdictions shall be obliged to take initiative in cooperating with ministries, central agencies or other relevant units in designing complete procedures for signing of loan agreements as sufficient grounds for drawing up the plan for disbursement of borrowed funds in the state budget estimate in 2019, and estimate the capability of disbursement of each loan in order to work out the appropriate plan for borrowing of funds and the local government budget deficit.

In case where a local jurisdiction plans to apply for a new loan for repayment of its loan principal (such local jurisdictions do not have the budget deficit or the amount of borrowed funds which are greater than the budget deficit) and this new loan is subject to binding requirements concerning loan purposes, this local jurisdiction shall prepare a relevant plan for reduction in capital expenditures and/or use other legitimate finances available within its authority in accordance with point 1 Article 5 of the Decree No. 163/2016/ND-CP in order to repay principal debts due in 2019, and use new loans for offsetting capital expenditures.

In case where the aggregate disbursement of the Government’s overseas borrowed funds on-lent to local jurisdictions as already agreed upon makes the local government budget’s outstanding debts greater than the prescribed limit, these local jurisdictions shall need to work out the plan for increases in repayment of the principal of other loan in order to ensure that the local government budget deficit, the local government budget s total loan and outstanding debt are within the prescribed limit.

c) Local jurisdictions shall take initiative in allocating funds for principal repayment from funding sources stated in clause 1 Article 5 of the Government s Decree No. 163/2016/ND-CP, ensure full and timely repayment of loans due, especially the Government s overseas borrowed funds on-lent to local jurisdictions, and guarantee that the local government budget’s outstanding debt is kept within the prescribed limit, enclosing explanatory notes on the amount of principal repayment with details corresponding to funding sources stipulated in point h clause 2 of this Article (if any) and sources of funding for repayment, including new loans used for repayment of previous debts, budget surpluses, revenue increases and savings on local government budget expenditures.

Chapter III

THREE-YEAR FINANCIAL - STATE BUDGET PLANNING FOR THE 2019 - 2021 PERIOD

Article 14. Planning requirements

2019 is the second year when the three-year financial - state budget plan is formulated. Pursuant to the 2015 Law on State Budget, Government s Decree No. 45/2017/ND-CP elaborating on the five-year financial planning and three-year financial – state budget planning, the Circular No. 69/2017/TT-BTC dated July 7, 2017 of the Ministry of Finance guiding formulation of the five-year financial plan and the three-year financial – state budget plan (briefly referred to as 69/2017/TT-BTC), the three-year financial – state budget plan for the period of 2019 – 2021 shall be developed in conformity with the following requirements:

1. Ministries, central and local agencies and units shall devise the three-year financial – state budget plan for the period of 2019 – 2021 under the instructions given in the three-year financial - state budget plan for the 2018 - 2020 period which has been revised and updated on March 31, 2018, spending caps for the period of 2019 - 2021 which are updated and informed by regulatory financial, planning and investment bodies.

In case where the amount of expenditures demanded by ministries, central ministries, agencies and provincial-level regulatory units during the period of 2019 – 2021 sharply increases or decreases compared with state budget expenditures which have been assigned and projected in 2018, is greater than the financial - state budget capability that finance and investment agencies update and inform for the three-year period of 2019 - 2021, ministries, central regulatory agencies and provincial-level units shall give interpretations and explanations, adopt measures to mobilize more off-budget financial resources and ensure spending demands have to be met by equivalent funding sources.

2. Particularly in 2021, determination of the amount of revenues, spending tasks, budget deficit and borrowing of funds shall be subject to the Law on State Budget, Laws on taxes, fees, charges, the Law on Public Investment, the Law on Public Debts and other relevant laws currently in force, and instructional documents thereof; the orientation towards restructuring of the state budget and management of public debts under the Resolution No. 07-NQ/TW; the schedule of implementation of Resolutions of the Meeting of the XIIthParty Central Committee, especially the Resolution No. 18-NQ/TW and No. 19-NQ/TW; state budget spending policies, regimes, tasks, programs and projects that are currently implemented at the approved stages; loan arrangements and agreements which have already been signed and effected in conformity with commitments.

3. The three-year financial – state budget plan for the period of 2019 – 2021 shall be formulated on the basis of measurement of certain following macroeconomic indices: in 2019 and 2020, it shall be expected that the growth is greater than in 2018, reach the average growth rate target of 6.5% - 7% for the entire period of 2016 – 2020; in 2021, the economic growth may be slowed as GDP level is high and the international economic growth tends to slow down; the consumer price index remains below 4%/year; the rate of increase in export and import turnover tends to decline.

4. Preparation, data reporting, synthesis and presentation of the three-year financial - state budget plan for the period of 2019 - 2021 shall be concurrent with the process of formulation of the 2019 s state budget estimate.

Article 15. Formulation of the plan for collection of state budget revenues

1. The three-year plan for collection of state budget revenues for the period of 2019 – 2021 shall be formulated on the basis of the updated three-year plan for the period of 2018 - 2020; the estimate of state budget revenues in 2019 and the estimated rate of growth in state budget revenues for 2020 and 2021 as per clause 2 of this Article; must adhere to the principles that all revenues from taxes, fees, charges and other legal revenues need to be aggregated and recognized in full in the state budget balance under the Law on State Budget.

2. The rate of growth in state budget revenues estimated for the period of 2019 – 2020 shall be determined in conformity with regulatory regimes and policies on state budget revenues that are currently in force, and by taking into account the followings:

a) The updated capability of developing the country s economy, specific industries, economic sectors and local jurisdictions for the period of 2019 - 2020, and the projection of such capability, which are commensurate with the macroeconomic contexts stated in clause 3 Article 14 hereof; factors causing changes in the investment and production – business development capability, commercial, export and import activities in each year; influencing factors of the international integration process.

b) Updated factors that may increase or decrease state budget revenues due to adjustments to policies on collection of state budget revenues, supplementation and expansion of taxation bases, strengthening of management of state budget revenues in conformity with directions given in the Resolution No. 07-NQ/TW and the Resolution No. 25/2016/QH14 of the National Assembly, and the Government’s Resolution No. 51/NQ-CP dated June 19, 2016 issuing the Government’s program of action for implementation of the Resolution No. 07-NQ/TW; implementation of the roadmap to tariff cuts under integration commitments made till 2021.

c) Effects of collection of state budget revenues from adjustments to public service prices and fees made according to the plan for proportioning of a full amount of costs in public service prices and fees under the Resolution No. 19-NQ/TW and the Decree No. 16/2015/ND-CP.

On such basis, the proportion of revenues from taxes and fees paid to the state budget compared with the average GDP level for the period of 2019 – 2021 shall be about 21%/year; the proportion of domestic revenues (exclusive of revenues from crude oil, land use fees, dividends, retained profits and revenues from lottery business activities) shall rise to at least 12% - 14%/year, and revenues from export and import activities shall increase to 5% - 7%/year on average.

Local jurisdictions may have different rates of growth in state budget revenues which may be greater than or less than the overall average growth rate, depending on conditions, characteristics, and are appropriate to the economic growth rate of each.

3. e) With respect to revenues obtained from fees and charges paid to the state budget, and retained for use as expenditures in accordance with regulations in force, ministries, central and local authorities shall, based on the proposed amount of revenues in 2019, make the plan for collection of revenues in 2020 and 2021 which is appropriate, positive and specific to each fee and charge (total revenue and the amount of revenues retained as expenditures according to regulations applied to corresponding spending sectors, and the amount of revenues remitted to the state budget) as prescribed by law, and shall integrate only a portion of fees and charges remitted to the state budget into the estimate of state budget revenues.

4. With respect to revenues from school fees and payments of costs of public medical and public sector services which are not in the list of fees and charges, and revenues obtained by shifting to application of the cost-of-service pricing mechanism, ministries, central and local regulatory authorities shall prepare the plan for collection and use of these revenues for submission to competent authorities for supervisory purposes, and continue to implement the mechanism for creating funds from these revenues in order to carry out pay reform in accordance with regulations in force.

Article 16. Formulation of the three-year plan for state budget expenditures spending for the period of 2019 - 2021 by ministries, central regulatory bodies and provincial-level regulatory agencies or units

1. The plan for state budget expenditures spending for the three-year period of 2019 – 2021 of ministries, central regulatory bodies and provincial-level regulatory units shall be formulated on the basis of updating the financial – state budget plan for the three-year period of 2018 – 2020, the amount of expenditures estimated in 2018 and the spending cap for the period of 2019 - 2021 informed by competent authorities, and shall provide specific explanations about spending demands which are increased or decreased in association with changes in regulatory regimes and policies in accordance with guidelines and approval decisions of competent authorities; on the basis of objectives, tasks, programs, proposals and projects (even including national target programs or target programs) that have expired/are newly approved with particular attention paid to implementation of the Resolution No. 18-NQ/TW, Resolution No. 19-NQ/TW, Plan No. 07-KH/TW, Resolution No. 08/NQ-CP and Resolution No. 10/NQ-CP of the Government on the Government’s actions on implementation of the Resolution No. 18-NQ/TW and the Resolution No 19-NQ/TW.

2. During the process of formulating the estimate of state budget expenditures in 2019, ministries, central regulatory bodies and provincial-level regulatory units shall concurrently detail grassroots-level and new expenditures of their own in the budgetary year of 2019 as per Article 5 and Article 6 of the Circular No. 69/2017/TT-BTC of the Ministry of Finance as the basis for determination of these expenditures, and shall integrate demands for capital and recurrent expenditures into the spending plan for the year 2020 and 2021.

Sector or industry ministries shall, in addition to working out the plan for state budget revenues and expenditures in each year of the period of 2019 – 2021 (with respect to the assignment directly carried out by ministries), need to make an accurate projection of the budget demand for implementation of mechanisms, policies and duties adopted by competent authorities for the period of 2019 – 2020, enclosing explicit explanations bout computing bases.

3. Upon planning capital expenditures, based on the real situation of implementation for the period of 2016 - 2018, the decentralized midterm public investment plan, the possibility of disbursement that is conforming, non-conforming or goes over the plan for implementation of each project, the reality of negotiation and signing of loan arrangements/agreements, ministries, sectoral administrations, central regulatory bodies, provincial-level regulatory units shall propose adjustments to the investment plan for the period of 2019 - 2020 to be in line with objectives and requirements of development of each industry, sector, local jurisdiction and to ensure it falls within the scope of the medium-term loan plan for the period of 2016 – 2020 which has already been assigned.

Particularly in 2021, the investment plan shall be formulated on the basis of the progress of implementation of investment programs, projects and assignments which are continued or in which the policy and decision on investment have been approved, in connection with implementation of strategic objectives for development of each sector, industry and orientation towards reform and development of the economy under Resolutions in the Plenum of the XIIthCentral Party Committee.

4. Formulation of the expenditure budget for implementation of national target programs and target programs:

a) Ministries and central agencies in charge of national target programs and target programs shall, based on objectives and assignments of programs, total capital and budget already approved for the period of 2016 - 2020, and the progress of implementation for the period of 2016 - 2018 and spending caps which have been informed, instruct ministries, central regulatory bodies and provincial-level regulatory units to prepare the capital and budget plan for the period of 2019 - 2020.

b) Particularly in 2021, the expenditure budget for implementation of national target programs and target programs for the period of 2016 – 2020 shall not be formulated. Supplementation of the expenditure budget for implementation thereof shall be updated after competent authorities issue policies and decision on implementation of national target programs and target programs from 2020.

5. Formulation of the expenditure budget for implementation of programs and projects using ODA funding sources (including loans and grants), preferential loans and foreign non-governmental aids:

Based on loan agreements and grant arrangements which have been entered into with sponsors and financial mechanisms of programs and projects and the reality of implementation for the period of 2016 – 2018, ministries, central regulatory agencies and provincial-level regulatory units shall establish the plan for spending of expenditures for programs and projects for the period of 2019 - 2020, elaborating on borrowed funds, non-refundable aids and counterpart funds of each program or project, and relevant to the funding nature (e.g. capital funds and recurrent funds) corresponding to each spending sector; spending of other funds provided that it ensures expenditures do not exceed the prescribed limit on medium loans for the period of 2016 – 2020.

Particularly in 2021, formulation of the plan for spending of expenditures financed by ODA funds, preferential loans and foreign non-governmental aids shall be subject to loan agreements and arrangements as well as financial mechanisms which have already been approved by competent authorities.

6. Formulation of the recurrent expenditure budget:

It shall be necessary to prepare a detailed plan for implementation of objectives, assignments, policies and regulations which remain valid/expire; new objectives, assignments, regulations and policies already approved by competent authorities.

With respect to reorganization of the apparatus, the expenditure budget shall be formulated on the basis of downsizing and reform of state-owned public sector units, based on the results thereof during the period of 2016 - 2018 and objectives to be fulfilled, ministries, central regulatory bodies and local authorities shall work out the implementation plan for each year and the budget amount granted to state-owned public sector units for these activities each year in alignment with specific objectives and assignments defined in the Resolution No. 18-NQ/TW and the Resolution No. 19-NQ/TW (elaborating on the budget amount specified under point b and point c, clause 3 Article 11 hereof).

With respect to the objectives of downsizing, the minimum amount of expenditures decreased each year shall be subject to the Conclusion No. 17-KL/TW.

Article 17. Formulation of the financial – state budget plan for the three-year period of 2019 – 2021 of provinces and centrally-affiliated cities

In addition to sticking to requirements for formulation of the state budget revenue and expenditure plan for the three-year period of 2019 – 2021 under the provisions of Article 15 and Article 16 hereof, formulation of the financial - state budget plan for the three-year period of 2019 - 2021 of centrally-affiliated cities and provinces shall take into consideration the followings:

1. According to socio-economic development objectives and tasks of each local jurisdiction for the five-year period of 2016 – 2020 which have already been decided by provincial People s Council, results gained from 2016 to 2018 and proposed socio-economic development objectives and tasks of each local jurisdiction in 2019, on the basis of the macroeconomic orientation stated in clause 3 Article 14 hereof, provincial People’s Committees shall direct the Department of Planning and Investment to make a forecast of socio-economic development situations within each local jurisdiction in 2020 and 2021 and submit it to the Department of Finance as a basis for formulation of the financial - state budget plan for the three-year period of 2019 - 2021.

2. Based on the required amount of revenues, scope of collection of state budget revenues under the Law on State Budget and guiding documents thereof, and the projection for collection of state budget revenues at each local jurisdiction in 2019, provincial People s Committees shall direct the Department of Finance to preside over and collaborate with the Taxation Department and Customs Department and other relevant regulatory bodies of each local jurisdiction in establishing the plan for collection of state budget revenues in 2020 and 2021, including the following information:

Make a detailed analysis and assessment of effects causing increases or decreases in state budget revenues in line with socio-economic development objectives, and proposing implementation of new policies for collection of state budget revenues prescribed in the Resolution No. 07-NQ/TW and the Resolution No. 51/NQ-CP of the Government on implementation of the Resolution No. 07-NQ/TW within respective local jurisdictions.

With respect to state budget revenues from fees and charges for 2020 and 2021, these cities and provinces shall be obliged to make the projection for implementation of collection of state budget revenues under applicable regulations, in line with the roadmap to increases in fees according to correct and full calculation of fees obtained from state-owned public sector services, and integrate the portion of fees remitted to the state budget into the projection for collection of state budget revenues for 2020 and 2021; prepare a separate plan for collection of revenues from tuition fees, medical costs, public sector service costs and others (not included in the schedule of fees and charges) for the purpose of managing, supervising and demanding creation of the budget for pay reform from the aforesaid funding sources.

Decentralization of state budget revenues shall be subject to provisions laid down in the Law on State Budget and other relevant guiding documents while decentralization of revenues from environment protection taxes on domestically-produced and imported oil and gasoline shall be temporarily defined at the percentage specified in 2018.

Local government budget revenues earned in 2019 and 2020 shall be determined on the basis of decentralization of revenues as mentioned above and the distribution percentage of revenues which have already been decided for entry into force by the National Assembly for the budgetary stabilization period from 2017 to 2020.

Since the year 2021 will be the first year of the new budgetary stabilization period, the distribution percentage of revenues and supplements to the state budget balance shall be determined as per the Law on State Budget. The projected amount of local government budget expenditures shall be determined as equal to the projected amount of local government budget expenditures in 2020. In particular, expenditures financed by revenues from land use fees and lottery business activities shall be equal to the amount of state budget revenues.

3. On the basis of the projection for sources of revenues within each local jurisdiction and local government budget revenues which have been decentralized, caps on supplements from the central budget to the local government budget which are informed by competent authorities during the period of 2019 - 2021, socio-economic objectives and tasks in 2020 and 2021, and accumulated results of implementation of finance – budget tasks already performed during the period of 2016 – 2018, the provincial People s Committee shall direct the Department of Finance to preside over and collaborate with the Department of Planning and Investment, the district-level People’s Committee and other relevant regulatory authorities at each local jurisdiction in formulating the local budget expenditure plan for the period of 2019 – 2021, ensuring priority given to allocation of sufficient funding for implementation of regimes, policies and tasks which have already been issued and spending commitments (even including particular policies decided by the provincial People’s Council); determining the demands for targeted supplementation of funding from the central budget for implementation of centrally-adopted regimes and policies for each year of the period of 2019 - 2021 under the Decision No. 579/QD-TTg; with respect to new spending tasks of a local jurisdiction in each year of the period of 2019 – 2021, allocating expenditures in order of priority to perform key socio-economic objectives and tasks of each local jurisdiction and where appropriate for available resources of each year of the period from 2019 to 2021. This plan shall take into consideration the followings:

- With respect to capital expenditures, based on accumulated results of implementation during the 2016 – 2018 period, and the midterm plan which has been authorized/approved for the 2016 – 2020 period, it shall be necessary to make a review and consolidated report on adjustments under delegated authority/propose adjustments to the public investment plan for the 2019 – 2020 period where appropriate to socio-economic development objectives and requirements, and the reality of implementation within each local jurisdiction or within the scope of the plan for allocation of (both domestic and foreign) midterm borrowed funds which has been authorized.

Where the accumulated amount of capital expenditures realized for the period of 2016 – 2018 and the amount of local government budget expenditures projected for the period of 2019 – 2020 are greater than that in the midterm plan for the period of 2016 – 2020, each local jurisdiction shall make a detailed report on funding sources for implementation, the amount of expenditures increased for implementation of investment programs, projects and assignments; for handling of capital construction debts; for recovery of advances.

Particularly in 2021, each local jurisdiction shall prepare the plan for investment under decentralization regulations the same as for the period of 2017 – 2020; the plan for implementation of programs, projects and assignments which are continued depending on the implementation progress; the plan for implementation of new programs, projects and assignments in which a full amount of investment procedures are provided as prescribed in currently applicable regulations; the plan for investment which correspond to the orientation towards continuation in restructuring of the budget and public debts for the period of 2021 – 2030 as provided in the Resolution No. 07-NQ/TW of the Politburo.

- With respect to recurrent expenditures, it shall be necessary to prepare a detailed plan for implementation of objectives, assignments, policies and regulations currently in force; new objectives, assignments, regulations and policies already approved by competent authorities; the plan specific to sectors; the plan which falls within total budget approved for the entire period of 2016 – 2020 (if any).

Each local jurisdiction shall make a consolidated report on results of implementation of the Resolution No. 18-NQ/TW and the Conclusion No. 17-KL/TW, the Resolution No. 19-NQ/TW and Plans or Resolutions for implementation of these Resolutions within its remit; budget expenditures made available and demands for downsizing within its remit as provided in clause 3 Article 11 hereof.

4. Each local jurisdiction shall budget for expenditures on pay reform, subject to regulations laid down in clause 7 Article 11 hereof (particularly for the rate at which an increase in local government budget revenues is retained, subject to the Resolution No. 27-NQ/TW dated May 21, 2018 on reform of salaries and wages paid to public servants, armed forces officers and employees of enterprises), with particular attention paid to the expenditure budget for this activity associated with implementation of the Resolution No. 18/NQ-TW and the Resolution No. 19/NQ-TW in accordance with clause 3 of this Article.

The expenditure budget associated with implementation of the Resolution No. 18/NQ-TW and the Resolution No. 19/NQ-TW (including the amount of revenues retained according to regimes appropriate for the roadmap to proportioning of expenses in public sector prices and fees under the Decree No. 16/2015/ND-CP) shall be assumed as salaries and wages for the period of 2019 - 2020 (if existing funding sources are not sufficient), as support given to beneficiaries of social welfare policies to have access to public sector services, and as salaries or wages applied from 2020.

5. The plan for budget deficit/budget surplus, borrowing of funds and repayment of debts of the local government budget in the period of 2019 - 2021 shall be formulated, subject to provisions set forth in the Law on State Budget, the Government s Decree No. 45/2017/ND-CP and the Circular No. 69/2017/TT-BTC of the Ministry of Finance on instructions for formulation of the five-year financial plan and the three-year financial - state budget plan, and subject to provisions on formulation of the plan for budget deficit/surplus, borrowing of funds and repayment of debts of the local government budget in 2019 as provided in clause 3 Article 13 hereof, and shall ensure that total outstanding debt of each local jurisdiction at the end of each year does not exceed the prescribed limit.

Chapter IV

IMPLEMENTATIONORGANIZATION

Article 18. Responsibilities of relevant ministries, central regulatory bodies and local authorities

1. Responsibilities of ministries, central regulatory bodies and People’s Committees of centrally-affiliated cities and provinces shall be subject to provisions laid down in the Law on State Budget and other relevant guiding documents, and other provisions laid down in clause 2, 3, 4 and 5 Article 17 of the Government’s Decree No. 45/2017/ND-CP dated April 21, 2017.

2. Responsibilities of ministries and regulatory authorities in charge of national target programs and target programs

a) On the basis of the authorized inspection amount of state budget expenditures, guiding relevant ministries, central regulatory bodies and local authorities to make a projection of budget for implementation of national target programs and target programs in 2019 and 2020, submit it to the Ministry of Finance and the Ministry of Planning and Investment prior to July 20, 2018.

b) Making a consolidated projection for implementation of each national target program and target program which they are authorized to manage and the plan for allocation of projected expenditures for 2019 and 2020 which is appropriate for each ministry, central regulatory body, centrally-affiliated city and province, and submitting it to the Ministry of Finance, the Ministry of Planning and Investment as legally prescribed.

Article 19. Forms used for formulation and reporting of the state budget estimate in 2019 and the three-year financial – state budget plan for the 2019 – 2021 period

1. With respect to the budget estimate in 2019, forms stipulated in the Circular No. 342/2016/TT-BTC dated December 30, 2016 of the Ministry of Finance elaborating on and guiding implementation of certain articles of the Decree No. 163/2016/ND-CP (forms from 12.1 to 12.5 applicable to public service sectors) and forms No. 01, 02 and 03 issued together with this Circular.

2. The projection for state budget revenues and expenditures derived from reorganization and handling of real property shall be made by using the forms No. 04, 05 hereto attached.

3. The three-year financial – state budget plan for the period of 2019 – 2021 shall be formulated by using the forms from 01 to 06 and forms from 13 to 19, issued together with the Circular No. 69/2017/TT-BTC of the Ministry of Finance providing guidance on formulation of the five-year financial plan and the three-year financial - state budget plan.

Article 20. Implementation provisions

1. This Circular takes effect on July 23, 2018. Contents, procedures and time of formulation of the state budget estimate in 2019 and the three-year financial – state budget plan for the 2019 – 2021 period shall be subject to the 2015 Law on State Budget and relevant guiding documents.

2. In the course of formulation of the state budget estimate in 2019 and the three-year financial – state budget plan for the 2019 – 2021 period, if there is any newly-adopted policy or regulation, the Ministry of Finance shall issue its instructional notice later. If there is any difficulty that may arise upon implementation, ministries, central regulatory bodies, economic corporations and state general companies shall be advised to send their feedbacks to the Ministry of Finance to take the immediate actions./.

For the Minister

The Deputy Minister

Do Hoang Anh Tuan