Proposal not to increase pensions and civil servant salaries in 2025

On the morning of October 22, authorized by the Prime Minister, Deputy Prime Minister Ho Duc Phoc reported on the implementation of the 2024 budget and the 2025 estimate.

Accordingly, the Government estimates the State budget for 2025 at over VND 1.96 trillion, an increase of 15.6% compared to 2024. Of which, domestic revenue is expected to be about VND 1.67 trillion, an increase of more than 6% over the previous year.

Mr. Phuc said that next year, to have enough money to pay salaries for the public sector according to the basic salary of 2.34 million VND per month, in addition to the budget, the Government plans to use 110,000 billion VND from the accumulated salary source. Accordingly, the estimated budget expenditure for next year is nearly 2.55 million billion VND.

The 2025 budget deficit is expected to be VND471,500 billion, equivalent to 3.8% of GDP. Public debt is about 36-37% of GDP, government debt is 34-35% of GDP, within the limit allowed by the National Assembly (60% of GDP).

According to Deputy Prime Minister Ho Duc Phoc, this budget estimate is positive in the context of the domestic and international socio-economic situation still facing risks and challenges. Regarding the budget allocation plan, he said that priority will be given to development investment spending, as well as sufficient sources for public sector salaries, pensions, social insurance benefits, preferential benefits for people with meritorious services, and other social security policies.

However, according to him, the budget revenue estimate is still risky in the context of difficult revenue collection, the real estate market has not recovered clearly, and equitization is slow. Along with that, the pressure to spend is very high, especially for urgent tasks and important projects. "Many ministries, branches and localities have reflected that the continuous saving of spending for many years has led to difficulties for them in organizing implementation," said the Deputy Prime Minister, adding that the borrowing demand next year is VND800,000 billion - the highest level ever.

To ensure budget balance, the Government recommends not to consider increasing pensions, public sector salaries, and preferential allowances for meritorious people in 2025. "In management, the Government will review and report to competent authorities to handle unreasonable actions by some subjects and sectors such as health and education," Mr. Phoc added.

Previously, from July 1, about 3.3 million people received an increase in pensions, social insurance benefits, and monthly allowances of 15%. Accordingly, for those receiving pensions before 1995, after adjustment, if the level of benefit is lower than 3.2 million VND per month, the increase will be 300,000 VND. Those with monthly benefits from 3.2 to under 3.5 million, the adjustment will be 3.5 million VND. The preferential allowance for people with meritorious services will increase to nearly 2.79 million VND per month; social assistance is 500,000 VND per month.

Also in today's submission, the Government proposed expanding the scope of using accumulated resources for salary reform of the central and local budgets to adjust a number of pension and subsidy policies and streamline staffing.

In addition, the Government also wants the National Assembly to allow the use of a portion of the remaining central and local budget salary accumulation fund (estimated at VND110,000 billion) to allocate a basic salary of VND2.34 million per month for ministries, branches and agencies. Localities with large salary reform resources can be considered to use this source to invest in regional and national connectivity projects and key projects. The condition is that the locality must commit to ensuring salary reform resources until 2030 and not request support from the central budget.

Examining this content, Mr. Le Quang Manh, Chairman of the Finance and Budget Committee, said that this agency unanimously agreed not to consider continuing to increase public sector salaries, pensions, and monthly social allowances for meritorious people next year.

The audit agency also agreed to allow the use of salary reform resources to reduce the pressure on the central budget when raising the basic salary to VND2.34 million per month. A portion of the remaining salary reform resources from the central and local budgets will be used to support the program to eliminate temporary and dilapidated houses for poor and near-poor households.

"It is necessary to minimize the issuance of policies that have the impact of reducing budget revenue to ensure sufficient resources are mobilized for important national spending tasks," the Chairman of the Finance and Budget Committee noted.

Regarding the central budget allocation plan, the Government plans to allocate VND20,000 billion for development investment expenditure tasks outside the scope of the Public Investment Law. The Finance and Budget Committee requests the Government to provide additional reports, clarify the allocation level, as well as the basis for the estimate with the payment and compensation for the Nghi Son Refinery and Petrochemical project.

In 2025, the Government plans to invest VND790,727 billion in public investment. Agreeing with this plan, the Finance and Budget Committee suggested that the Government should have a specific list of projects, arrange them reasonably, as well as increase inspection and supervision to avoid losses and large transfers of resources to the following year.

Regarding the 2024 budget, Deputy Prime Minister Ho Duc Phoc said that budget revenue is estimated at 1.87 quadrillion VND, an increase of more than 10% compared to the estimate. The budget mobilization rate is 16.5% of GDP.

Domestic revenue still contributes a large proportion to the budget revenue, with 1.57 million billion VND, exceeding the estimate by nearly 9%. Revenue from crude oil was 59,300 billion VND, import and export revenue was 235,200 billion VND, exceeding the estimate by nearly 29% and 15.3% respectively.

This year's budget is expected to spend more than 2.1 million billion VND. The deficit is about 389,400 billion VND, equivalent to 3.4% of GDP. This level is 10,000 billion VND lower than the estimate.

However, 11 localities did not meet their budget estimates. If we deduct revenue from land use fees, lottery, dividends, etc., 8 localities still had a budget deficit.

Chairman of the Finance and Budget Committee Le Quang Manh, when reviewing the proposal, suggested that localities with revenue shortfalls this year should "actively increase revenue, reduce unnecessary spending and use reserve funds to ensure budget revenue for the whole year."

Mr. Manh also acknowledged that there are still some 2024 budget expenditures that have not been submitted to the National Assembly or the National Assembly Standing Committee for allocation according to regulations. This agency requested the Government to clarify the reasons, promptly allocate or submit to competent authorities to ensure the ability to disburse and use resources effectively.

"The government needs to take drastic measures to ensure the responsibility of heads of agencies and units in their commitment to disbursement progress to avoid waste and loss," he said.