Revenue and expenditure challenges for Vietnam's new Finance Minister

Vietnam's new Finance Minister Ngô Văn Tuấn faces pressure to unlock capital and maintain fiscal space, as the economy needs large resources to grow. On April 8, the National Assembly approved Ngô Văn Tuấn to serve as Finance Minister for the 2026-2030 term. Tuấn takes office at a time when Vietnam stands at a crossroads with a breakthrough goal, aiming to maintain growth above 10% per year for the next five years to become a developed country by 2045. 'The goal of high economic growth places very large demands on the financial sector,' Tuấn said upon taking office, noting that in the current context, in addition to revenue and expenditure management, the ministry also plays a strategic advisory role in macroeconomic management. He added, 'budget collection, expenditure management, and mobilizing capital for development investment must be elevated to a higher level, ensuring proactivity, flexibility, and effectiveness.' In reality, the five-year fiscal picture has had many bright spots and provides the foundation for policymakers. Total budget revenue for 2021-2025 is estimated at 9.75 quadrillion dong, exceeding targets thanks to tax reform and digitalization. Current expenditures have been tightened, helping the budget deficit stay at a low 3.1-3.2% of GDP. Notably, public debt declined from 42.7% of GDP in 2021 to around 36-37% of GDP by 2025, well below the ceiling set by the National Assembly. Dr. Nguyen Quoc Viet, a public policy expert at the University of Economics (Vietnam National University, Hanoi), said this fiscal space allows the government to 'boldly mobilize capital for large-scale infrastructure projects while ensuring financial safety of the country.' The budget revenue structure is also shifting toward sustainability as key sources (except oil) all rise. Last year, the domestic revenue share accounted for more than 86% of total state budget revenue. Revenue from imports and exports also rose nearly 18% compared to the same period in 2024, thanks to record trade turnover exceeding 920 billion USD. However, revenue from crude oil fell by 18% year-on-year from the same period in 2024. The budget is no longer overly dependent on resources like crude oil; instead, it relies on the economy's internal strength, indicating the government's financial health is becoming more resilient to external shocks. However, Viet cautioned that this 'anchor' could be shaken if revenue continues to rely on cyclical sources, such as land. Industry experts have cited statistics from 2005 to the present showing that land-based revenue, including land use fees, is the largest source of domestic revenue, accounting for 13.1-16% of total domestic revenue. This money also depends on real estate market fluctuations. Viet argued that current revenue shows signs of stagnation due to high base effects from previous years and domestic economic difficulties. This raises the risk of revenue shortfalls in the near future. Next is the pressure to remove bottlenecks in disbursing public investment. In 2021-2025, although the disbursement value each year was higher than the previous year, delays persist. The cyclic constraints of public disbursement often shift into the final quarter. For example, last year, by the end of November there were more than 360,000 billion dong (about 40% of the plan) still unable to disburse. Delays in disbursement significantly affect the economy's momentum because public investment remains an important growth driver. Calculations for 2021-2025 show that a 1% increase in public investment disbursement adds 0.058 percentage points to GDP. 'The authorities need to reform institutions to reduce compliance costs for businesses, helping the private sector absorb capital more effectively,' Viet noted. In addition, PPP models need more transparency to mobilize private and foreign capital into green infrastructure and high-tech sectors. Beyond institutions, Le Xuan Truong of the Financial Academy notes that the finance sector must tie budget allocations to measurable KPI indicators. 'We must decisively cut wasteful expenditures to concentrate resources on key infrastructure, avoiding dispersion,' he added. 'Finding external-budget sources is also a challenge for the new Finance Minister in this term. To sustain annual growth above 10% per year for five years, the economy needs about 8.22 quadrillion dong of capital for public investment—almost three times the previous period. This capital, according to the Government, will be prioritized for breakthrough projects, transformation, and turning the situation around, such as key projects, national strategic programs.' This challenge requires operating policies that ensure flexible fiscal policy, with timely 'opening the taps' to support growth. At the same time, budget discipline must be tightened to avoid burdening future debt repayment. While budget capital is limited, long-term funding channels such as the stock market and corporate bonds have not developed proportionately. This makes bank credit the leading channel for capital. Viet said now is the time for the new Finance Minister to take strong measures to revive the corporate bond market – the lifeblood of medium- and long-term capital for the economy, thereby reducing bad debt pressure on the banking system. He proposed establishing a special mechanism (institutional sandbox) to resolve non-performing debts and unblock stalled projects in real estate and energy sectors. 'This will reduce capital pressure on the banking system and create fiscal space that the state does not need to inject more money directly,' Viet commented. Similarly, Le Xuan Truong says authorities should improve the legal framework for the stock market and accelerate the development of financial centers in Da Nang and Ho Chi Minh City to international standards. Nevertheless, the decisive factor for the success of fiscal policy remains people. Truong says the finance civil servants must meet the requirements for digital thinking and skills, and must have integrity and dedication. 'Indeed, some state agencies and local authorities do not implement policies in line with policy, creating bottlenecks in governance. Therefore, this issue must be addressed to improve policy effectiveness,' he said. Phuong Dung