DIRECTIVE

ON THE ELABORATION OF THE 1998 SOCIO-ECONOMIC DEVELOPMENT PLAN AND STATE BUDGET DRAFT

Panoramically, the socio-economic development and the State budget revenue and expenditure in the first six months of 1997 continued to show positive signs: the production and circulation of goods grew at a relatively high rate, the export strongly developed, the import was properly readjusted, the inflation was curbed, progress was made in various aspects of the social life.

However, there emerged in the first six months of 1997 a number of problems that must be tackled: the domestic industry developed unevenly, with signs of non-growth or slow growth seen in a number of branches and sectors; the product sale ability found its difficulties; the situation of deflation was not overcome yet; the capital construction investment was low, the ODA capital was slowly disbursed; financial and monetary situation remained unstable, the budget remained constrained; social evils were not repelled, smuggling and tax evasion were not effectively curbed.

With a view to successfully implementing the Resolution of the National Assembly on the 1997 tasks and plans, the Prime Minister instructs the ministries and localities to organize, during the last six months of the year the effective application of urgent measures charted out in the resolutions of the April, May and June regular meetings of the Government; and at the same time to promptly organize the elaboration of the 1998 plan with the following contents and schedule:

I. THE MAIN TASKS AND CONTENTS THAT REQUIRE ATTENTION WHEN THE 1998 PLAN IS ELABORATED

1. The main tasks of the socio-economic development plan:

a) To continue the application of measures to accelerate the production and business development, to maintain a high and stable economic growth rate, to attain progress in terms of quality and efficiency in the socio-economic development, to direct investment to the production and business in service of export, create impetus and force for the fulfillment of objectives set to the year 2000.

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c) To raise the efficiency of the external economic activities, expanding the export market, concentrating on export-led investment and applying synchronous measures to promote export, importing sufficient supplies, raw materials and technologies to meet the demand of production, construction and essential consumption. To attract official development assistance (ODA) and foreign direct investment (FDI) capital.

d) To develop in a stable manner the national finance, orienting it toward the efficient use of financial sources of the country, quickly raising the accumulation for development investment, meeting to the maximum extent the need for capital for production, business and capital construction, practicing economy in the budget expenditures and public consumption. To properly collect taxes and fees for the budget according to the Resolution of the National Assembly, effectively using the budgets by all branches and levels. To continue the reform in all activities of the banking system so as to promote the mobilization of capital sources to meet the need for medium-, long- and short-term loans. To work out plans for the expansion and development of monetary market and capital market, step by step forming the stock market to supply capital for the economy; to control the inflation at a reasonable rate.

e) To carry forward more fruitfully the cultural and social programs, well implement the Resolution of the second plenary meeting of the Party Central Committee on the education, training, science and technology; to accelerate the attainment of the targets in raising the peoples intellectual level, training, fostering and raising the quality of human resource. To create more jobs for laborers in both rural and urban areas. To develop cultural and information activities, expanding the radio and television coverage; to care for and protect the peoples health, to effectively prevent and combat social evils. To concentrate more efforts on programs for socio-economic development in the mountainous areas and the areas inhabited by people of ethnic minorities, on the famine-eradication and poverty-alleviation program, step up the construction of socio-economic infrastructures in difficult areas.

f) To continue with the task of consolidating the national defense and security; to universalize the law education and guide people to live and work by laws; to ensure the order and discipline in economic activities and the social security for development. To continue with the program on State administrative reform, to raise the capability of the contingent of cadres at all levels in the spirit of the Resolution of the third plenum of the Party Central Committee. To continue applying more effective measures to combat corruption and negative social phenomena.

2. Some major targets as compared to those set for 1997:

- The gross domestic products (GDP): increasing by 9-9.2%;

- The agricultural, forestry and fishery production value: increasing by 4.7-4.8%;

- The industrial production value: increasing by 14-14.5%;

- The value of the service sector: increasing by 11-12%;

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- The total import value: increasing by 18-20%;

- The consumer goods and service price indices: around 7-8%;

- The development investment by the entire society: increasing by 26-28%.

3. On the State budget:

a) To quickly raise the financial capacity and resources of the country, make the national finance healthy, make substantial progress in restructuring the State budget, increasing the budget expenditure percentage for development investment, education and training, scientific research, technology and environment; to well implement the policy on mobilization of all sources of the entire society for the development of education, public health, culture and social affairs.

The draft of State budget revenue must be made in accordance with law, covering and exploiting all sources of revenue, effectively combating collection failures, ensuring the equality in production and business for all enterprises; and at the same time to attach importance to setting up a mechanism to encourage the development of production and business, in order to foster and broaden the revenue sources.

The State budget shall be balanced on the following principles:

- The collection of taxes and fees must ensure the regular spendings at a reasonable and economical level, and the payment of due debts, and a proper portion accumulated for development investment;

- The growing rate of regular spendings must be lower than that of spendings for the development investment.

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c) To keep the regular spendings at a necessary, rational and economical level, not exceeding 70% of the total tax and fee collection, to give priority to education and training, scientific research, the absorption of modern technology, environmental protection, the protection of the peoples health, national defense and security and the solution of burning social issues on the basis of continuing to reorganize each unit and each branch with reassigned functions and tasks, taking into account the factor of implementing the policy on socialization thereof. To make reasonable and economical expenditures on administrative management, restricting the spendings on things in the State management agencies.

d) To allocate capital for the capital construction from the 1998 State budget with priority given to key projects of the State and to ensure sufficient reciprocal capital so as to receive foreign capital according to the agreed timetable, paying attention to the construction of infrastructure in mountainous areas, the Central Highlands, the Mekong River delta, to give priority to education and training, scientific research, technology and environment. To concentrate capital on projects which are to be completed and put into use in the year, capital shall be allocated to newly started projects only when they meet all prescribed conditions. To put an end to the situation of scattered allocation of capital, especially for group-C projects.

e) To make additional spendings in accordance with the Law on the State Budget, to keep the spendings from financial reserve fund at a rational level.

f) The State budget overspending must correspond to the possibility of domestic borrowings and foreign preferential borrowings. Not to make foreign commercial borrowings or not to issue banknote or make domestic short-term borrowings with high interest rates so as to make up for the State budget overspending. The level of overspending should represent about 3.5% of the GDP (excluding borrowings for re-lending).

g) The State budget draft must be made from the grass-roots level, ensuring its practicality and the strict compliance with the State budget revenue and expenditure regulations and norms set by the competent State agencies; in cases where such regulations are not available, are issued ultra vires, or need to be amended or supplemented, proposals must be submitted to the competent level for issue, amendment or supplement before the 1998 State budget draft is made. The procedures and mode for drafting and deciding the State budget must be carried out in accordance with the Law on the State Budget and documents guiding the implementation thereof.

h) The ministries, State agencies shall, within their assigned functions, have to set socio-economic targets and specific mechanisms and promptly inform the Ministry of Finance, other ministries and localities thereof before the time the State budget draft is made as prescribed in documents guiding the implementation of the Law on the State Budget which shall serve as basis for drafting and implementing the 1998 State budget. The regimes and policies serving as basis for drafting the 1998 budget must be studied and issued in 1997 to avoid passiveness in the course of the State budget management.

i) To maintain a stable percentage of revenues to be divided among the budget levels as in 1997. Particularly, the additional allocations from the higher-level budget to the lower-level budget shall be allowed to increase by 6% as compared to the amount allocated in 1997.

j) To promulgate specific policies and regimes so as to implement the policy on mobilization of the peoples contributions to the construction of socio-economic infrastructure projects and structures. To uniformly manage the mobilization and use of capital sources for the development of education, public health, social affairs in an efficient, democratic and open manner.

II. THE ORGANIZATION OF IMPLEMENTATION

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- The Ministry of Planning and Investment shall guide the elaboration and synthesis of socio-economic development plans; assume the main responsibility in working on such plans with the ministries and localities, with the participation of the Ministry of Finance;

- The Ministry of Finance shall announce the control numbers of the 1998 estimated State budget revenues and expenditures and guide the ministries, branches and localities in organizing the implementation, assume the main responsibility in working with the ministries, branches and localities on the estimated State budget revenues and expenditures, the funding for the national programs, with the participation of the Ministry of Planning and Investment;

- The ministries, branches and agencies that manage the national programs shall coordinate with the Ministry of Planning and Investment and the Ministry of Finance in working with the concerned ministries, branches and localities on the tasks of socio-economic development and budget drafts within their respective management fields;

- The Peoples Councils and the Peoples Committees of the provinces and cities directly under the Central Government shall guide and organize the budget drafting and determine the 1998 budget drafts of the local administrations in accordance with the provisions of the Law on the State Budget.

2. Progress and schedule:

- Before August 10, 1997, the ministries, branches, corporations 91 and the Peoples Committees of the provinces and cities directly under the Central Government shall submit to the Ministry of Planning and Investment and the Ministry of Finance their reports on socio-economic development plans and 1998 budget drafts so that such ministries sum up and submit them to the Government.

- From now to the end of August 1997, the Ministry of Planning and Investment and the Ministry of Finance shall work with the ministries and localities then sum up the plans and submit them to the Government and the Commissions of the National Assembly for proposing them to the X^th National Assembly; and at the same time work out a plan for the allocation of central budget to each ministry and central agency and additional allocation of the central budget to each province and city directly under the Central Government and propose it to the National Assembly Standing Committee for decision after the National Assembly adopts the 1998 State budget draft.

3. The Prime Minister requests the ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government, the Presidents of the Peoples Committees of the provinces and cities directly under the Central Government to closely direct the process of elaboration and synthesis of plans and 1998 State budget drafts, and ensure the fulfillment of the set orientations, tasks and objectives.

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FOR THE PRIME MINISTER
DEPUTY PRIME MINISTER




Phan Van Khai