Management of Regular State Budget Expenditures in Thai Nguyen Province, Vietnam

This article analyzes the current state of state budget expenditure management in Dai Tu district, Thai Nguyen province, in the period 2020–2022. The results show that state budget management activities have contributed significantly to helping the district achieve major changes during this period. In the period 2020–2022, Dai Tu district will manage regular budget expenditures locally in accordance with the provisions of law, regulations, and guiding documents of the Ministry of Finance and superior financial agencies. The economy maintains stable growth; people’s lives are always guaranteed.

Introduction

Dai Tu is a mountainous district located in the Northwest of Thai Nguyen province; economic development conditions are still difficult; the population is mainly ethnic minorities with backward customs and production practices and poor agriculture. The industry still accounts for a high proportion of the economic structure. Like other provinces across the country, the management of state budget expenditures in Thai Nguyen province, in general, and Dai Tu district, in particular, has had positive changes, achieved many good results, and has gradually been specified according to effective direction. The results of implementing expenditure management have made an important contribution to using the state budget more and more effectively. In 2022, although the District People’s Committee has strengthened management measures and reviewed expenses incurred in the area, due to the state budget management in the area not being strict, state budget expenses incurred during the period are still higher than the proposed estimate. Total state budget expenditure in Dai Tu district reached 1,844.6 billion VND, equal to 135.3% of the district estimate, of which regular expenditure reached 827.54 billion VND (accounting for 44.9% of the total district state budget expenditure) (Thai Nguyen General Statistics Office, 2023).

Regarding budget expenditure management, budget expenditure administration ensures strictness, efficiency, and compliance with the State Budget Law and documents guiding the implementation of the State Budget Law and Circulars issued by the Ministry of Finance. The local budget (local budget) fully meets the expenditure contents allocated in the approved estimates for agencies and units, ensuring that funds for salaries, allowances, and expenses are implemented. They are implementing social security policies in the area.

Besides the results that were achieved, the Dai Tu district faces many difficulties and challenges. The province’s economy is growing well but not sustainably. In 2020, in the context of the complicated COVID-19 pandemic, it has been affecting the production and business activities of enterprises, affecting socio-economic life and directly impacting accounts of state budget revenue. Therefore, the effective management and economical use of regular state budget expenditures ensures a timely and complete response to the spending needs of local authorities at all levels and strengthens the task of investment spending. Development and other unexpected expenditures, as well as overcoming and minimizing the limitations in managing regular state budget expenditures mentioned above, are essential requirements for agencies that manage and use the state budget in the Dai Tu district.

There is much research on the management of regular state budget expenditures. These were followed by a number of further studies, such as that of Henning and Robert (1996), Daniel and Yilin (2013), and Hieu (2019). Hieu (2019), in the empirical results, shows that the state budget expenditure of Vietnam positively affects the economy. However, each main component has different impacts. Recurrent expenditure significantly impacts the Vietnamese economy, while there is no evidence to affirm the relationship between development investment expenditure and economic growth. The Vietnamese government should restructure the state budget to enhance the positive effect on the economy.

Empirical Analysis and Discussion of Results

Management and Preparation of State Budget Regular Expenditure Estimates

The structure of allocation of regular expenditure estimates in the district state budget has differences between expenditure contents. In 2020, the total estimated recurrent expenditure of Dai Tu district’s state budget is 724,393 million VND. By 2021, it will decrease to 721,060 million VND, a negligible decrease compared to 2020. In 2022, the estimated regular expenditure of Dai Tu district’s state budget will increase by 795,339 million VND compared to 2020. In 2021, it will reach 74,279 million VND.

The expenditure content that accounts for the highest proportion in the regular expenditure estimate developed for the Dai Tu district is the education and training expenditure, accounting for over 50% of the total recurrent expenditure estimate. This spending level is completely consistent with Circular No. 91/2016/TT-BTC of the Ministry of Finance promulgating instructions for developing 2017 estimates, clearly stating that priority is given to spending in the field of education-training, and the teaching profession.

Expenditure content accounts for the second highest proportion in the regular expenditure estimate, State, Party, and union-management expenditure, accounting for more than 20% of the total expenditure estimate. However, the estimated spending for this content by 2022 shows signs of decreasing by 4.4% compared to 2021 due to the administrative reform in the Dai Tu district in terms of reducing administrative management costs to achieve certain results.

The estimated environmental expenditure of Dai Tu district in 2022 is 7,625 million VND, down 181.6% compared to 2021. The reason is that the environmental sanitation management board does not spend the entire district budget to perform environmental protection tasks.

In general, preparing and allocating district state budget estimates has followed the province’s spending norms. It is consistent with the socio-economic conditions of the remote district of Dai Tu. However, the management of district-level recurrent expenditure estimates in Dai Tu still has some shortcomings and limitations, such as the estimate submission time being slow, the quality of estimates prepared by units is not high, and is less effective. Convincingly, the estimated data do not closely match the actual requirements.

The information about the investment is shown in Table I.

Table I. Estimated Regular Expenditures of Dai Tu District’s State Budget in the Thai Nguyen Province (Unit: Mill. Dongs, %)

No.	Indicator	2020	2021	2022	Compared
					2021/2020	2022/2021
1	Defense spending	18.640	21.190	22.593	12,03	6,2
2	Security expenses	13.997	14.190	11.375	1,4	−24,7
3	Expenditure on education and training	384.399	384.374	421.175	−0,007	8,7
4	Medical career expenses	10.210	9.284	8.236	−10	−12,7
5	Expenditure on culture-sports and radio-television	4.321	5.992	10.830	27,9	44,7
6	Social security spending	50.700	43.961	53.853	−15,3	18,4
7	Economic career expenses	43.047	47.326	61.148	9,04	22,6
8	Expenditure on environmental causes	27.259	21.470	7.625	−27	−181,6
9	Expenses for state, party, and mass administrative management	164.064	166.847	159.842	1,7	−4,4
10	Expenses other than the budget	2.530	2.766	3.461	8,5	20,1
11	Expenditure on salary reform	5.226	3.660	35.302	−42,8	89,6
	Total	724.393	721.060	795.339	−0,5	9,3

The reasons for the limitations are as follows:

1. Estimation work follows the input management method, so it is not close to the actual situation, cannot regularly update changes in new policy planning, and the estimating unit does not pay attention to considering the effectiveness of the annual funding source to balance the budget appropriately, not fully grasping the spending tasks that must be performed during the year leads to uneven spending arrangements requiring adjustment of spending estimates between sectors.
2. The payroll of workers receiving state budget salaries continues to increase, labor productivity in state agencies does not increase, and the level of state budget spending savings is not significant.
3. The level of estimate development at budget-using agencies and units is still weak because many staff doing accounting work at the units are not properly trained.

Management of and Compliance with State Budget Regular Expenditure Estimates

In 2020, the final expenditure was 816,072.2 million VND, which is equal to 112.7% of the estimate assigned by the Provincial People’s Council and District People’s Council. In 2021, the total recurrent expenditure was 748,003.1 million VND, equal to 104.3% of the estimate assigned by the Provincial People’s Council and equal to 103.7% of the district People’s Council. In 2022, the total recurrent expenditure is 827,540.8 million VND, equal to 105.1% of the estimate assigned by the Provincial People’s Council and equal to 104 assigned by the District People’s Council. In all three years, regular expenditure increased mainly from additional provincial budget subsidies in the year increased expenditure from the previous year’s carryover source.

Table II shows the implementation situation with the recurrent expenditure estimate in Thai Nguyen province, Vietnam.

Table II. Compare the Implementation Situation with the Recurrent Expenditure Estimate in the Thai Nguyen Province (Unit: Mill. Dongs, %)

No.	Indicator	2020			2021			2022
		Estimated	Performed	Compared	Estimated	Performed	Compared	Estimated	Performed	Compared
				±(Δ)			±(Δ)			±(Δ)
1	Defense spending	18.640	19.106,6	467	21.190	24.900,4	3.710,4	22.593	23.875,3	1.282,3
2	Security expenses	13.997	13.585,3	−412	14.190	1.211,8	−918,2	11.375	12.776,3	1.401,3
3	Expenditure on education and training	384.399	373.268,3	−11.131	384.374	370.933,6	−13.440,4	421.175	419.190,6	−1.984,4
4	Medical career expenses	10.210	9.169,1	−1.041	9.284	9.172,3	−111,7	8.236	9.508,3	1.272,3
5	Expenditure on Culture-sports and radio-television	4.321	6.594,3	2.273	5.992	9.321,4	3.329,4	10.830	12.468,6	1.638,6
6	Social security spending	50.700	67.698,9	16.999	43.961	47.916,9	3.955,9	53.853	59.850,3	5.997,3
7	Economic career expenses	43.047	58.334,8	15.288	47.326	44.881	−2.445	61.148	66.937,2	5.789,2
8	Expenditure on environmental causes	27.259	69.224,8	41.966	21.470	21.590,8	120,8	7.625	7.405,8	−219,2
9	Expenses for state, party, and mass administrative management	164.064	196.266,7	32.203	166.847	197.185,2	30.338,2	159.842	204.109,1	44.267,1
10	Expenses other than the budget	2.530	2.823,4	293	2.766	8.889,7	6.12,73	3.461	11.419,3	7.958,3
11	Expenditure on salary reform	5.226	–	–	3.660	–	–	35.302	–	–
	Total	724.393	816.072,2	91.679	721.060	748.003,1	26.943,1	795.339	827.540,8	32.201,8

Some expenses increased compared to the estimates assigned by the District People’s Council:

1) Defense Expenditure

In 2020, the final settlement of defense expenditure was 19,106.6 million VND, equal to 102.5% of the estimate assigned at the beginning of the year. This increase in expenditure is due to increased expenditure from the district budget reserve to pay family allowances for the Reserve Battalion for training in 2020 and expenditure on increasing work-day support for the Mobile Militia, participating in overcoming the consequences of natural disasters. In 2021, the final settlement of defense spending was 24,900.4 million VND, equal to 104.3% of the estimate at the beginning of the year. This increase in expenditure is due to increased expenditure from the district budget reserve for forces participating in COVID-19 pandemic prevention. In 2023, the final settlement of defense expenditure was 23,875.3 million VND, equal to 105.7% of the estimate at the beginning of the year. This high expenditure is also due to increased expenditure from the district budget reserve for forces participating in COVID-19 epidemic prevention and expenditure to ensure local defense work in 2022.

2) Expenditure on Culture-Sports and Radio-Television

In 2020, this expenditure was finalized at 6,594.3 million VND, equal to 152.6% of the estimate assigned at the beginning of the year. The reason is the spending on propaganda work for the Party Congress at all levels for the 2020–2025 term and COVID-19 epidemic prevention work from the provincial, district, and commune budgets. In 2022, the expenditure for Culture-Sports and Radio-Television will increase by 115.1 million VND compared to the estimate at the beginning of the year. The reason is due to increased spending from social sources to support the district budget to spend on celebrating the 100th anniversary of the Dai Tu district’s formation and development, receiving the First Class Labor Medal, and repairing and embellishing geological relics. The announcement point for War Invalids and Martyrs Day was on July 27, 1947, in Hung Son commune.

Reality shows that the process of implementing regular expenditure estimates still has many limitations, such as the high difference between the prepared estimate and actual expenditure. The estimated estimate is lower than the actual recurrent expenditure, leading to a situation where, in the years 2020–2022, the estimate was built, but the expenditure exceeded the estimate too high.

Management of the Final Settlement of the State Budget Regular Expenditures

Most units prepare final settlement reports in accordance with the regulations of the Ministry of Finance. In 2020, 72 units prepared settlement reports in accordance with regulations, accounting for 87.8%; 10 units prepared reports incorrectly, accounting for 12.2%. In 2021, there will be 78 units preparing settlement reports in accordance with regulations, accounting for 95%; 4 units prepared reports incorrectly, accounting for 5%. In 2022, there will be 80 units preparing settlement reports in accordance with regulations, accounting for 98%; 2 units prepared reports incorrectly, accounting for 2%. Table III shows the Final Settlement of the State Budget Regular Expenditures.

Table III. Level of Preparation of the Final Settlement Reports of Units Receiving Dai Tu District’s Budget, Thai Nguyen Province

No.	Indicator	2020	2021	2022	Compared
					2021/2020	2022/2021
1	Total	82	82	82
2	Reporting level
	Number of units preparing settlement reports in accordance with regulations	72	78	80	7,7	2,5
	Ratio (%)	87,8	95	98	7,6	3,1
	The number of units preparing settlement reports does not comply with the regulations	10	4	2	−150	−100
	Ratio (%)	12,2	5	2	−144	−150
3	Report submission time
	Number of units submitting final settlement reports on time	73	77	81	5,2	4,9
	Ratio (%)	89	93,9	98,8	5,22	5
	Number of units submitting final settlement reports late	9	5	1	−80	−400
	Ratio (%)	11	6,1	1,2	−80,3	−408
4	Quality of settlement reports
	Prepare reports according to budget contents	76	79	77	3,8	−2,6
	Ratio (%)	92,7	96,3	93,9	3,73	−2,6
	Prepare a report without the correct NS table of contents	6	3	5	−100	−40
	Ratio (%)	7,3	3,7	6,1	−95,3	39,3

With the coordination of regular budget expenditure management between the Dai Tu District People’s Committee and the Department of Finance, state budget revenues and expenditures of agencies and units using the budget are all implemented through the State Treasury according to accordance with State Budget Law. There is no more overspending or spending for wrong purposes or policies.

The state budget settlement work of Dai Tu district still has some limitations, such as (1) the inspection of the situation of using funds at budget-using units has not been done regularly, and (2) the new budget settlement focuses on the content of the budget. Appraisal of settlement according to documents is not linked to effective use of budget. The new budget settlement stops at determining figures for the year without analyzing and evaluating the effectiveness of budget use. Currently, budget settlement work has not yet been effective in detecting unreasonable financial management in budget-using units to come up with solutions to overcome limitations.

Currently, the management of regular budget expenditures does not bind the responsibilities of leaders of departments and branches in the areas of budget use of the units under their management.

Conclusions and Recommendation

Management of state budget expenditures in general and management of regular district state budget expenditures, in particular, play a very important role in ensuring that the budget is used effectively in socio-economic development, contributing to the economic restructuring of the province’s economy. Managing state budget recurrent expenditure effectively will encourage economic development and contribute to macroeconomic stability. Through the research process, the paper achieved the following results:

From 2020 to 2022, Dai Tu district will manage regular budget expenditures locally in accordance with the provisions of law, regulations, and guiding documents of the Ministry of Finance and superior financial agencies. Outstanding achievements have been achieved, effectively mobilizing local financial resources to serve district economic development and ensuring the area’s socio-political goals, national security, and defense. The rate of regular state budget expenditure has always increased in the past three years. The revenue source is enough to supply regular expenditures, and the budget deficit is very small. This demonstrates the efforts of the district-level state budget management system, from policies and orientations to instructions to help beneficiary units complete records and reports according to regulations. However, district budget management still has shortcomings, such as recurrent expenditure estimates being lower than regular budget settlements.