Draft Law on the State Budget (Consolidated Version)

The Ministry of Finance stated that the State Budget Law No. 89/2025/QH15 (the 2025 State Budget Law), passed by the National Assembly on June 25, 2025, and effective from the 2026 fiscal year, has strengthened decentralization and devolution of authority, enhancing the autonomy and accountability of budget-using units; prioritizes resources for science and technology development, innovation, and digital transformation; simplifies payment and settlement procedures; and shortens the timeframe for settling the state budget (NSNN),… To date, competent authorities have issued resolutions, decrees, and circulars to provide the legal framework for implementing the Law starting with the 2026 fiscal year.

Public Investment Law No. 58/2024/QH15, effective as of January 1, 2025, and amended by Law No. 90/2025/QH15 of the National Assembly dated June 25, 2025, has focused on promoting decentralization, delegation of authority, simplifying administrative procedures, and improving the efficiency of capital use, with the aim of addressing “bottlenecks” in the disbursement of the public investment plan.

In the implementation of the provisions of the State Budget Law and the Public Investment Law related to public investment expenditures, there are still some shortcomings and limitations. The State Budget Law governs the processes of budget formulation, allocation, execution, auditing, settlement, disclosure, and oversight, including state budget expenditures for public investment. Meanwhile, the Public Investment Law governs the entire process of managing and utilizing public investment capital, from planning, appraisal, and decision-making on investment policies and investment decisions, to the formulation and allocation of capital plans, implementation, acceptance, handover, and final settlement of project funds.

Thus, for a given public investment fund from the State Budget, it is subject to both the State Budget procedures and the public investment procedures. This reality gives rise to overlaps in authority, documentation, procedures, deadlines, and responsibilities between the stages of formulating and allocating the state budget estimate and those of formulating and allocating the public investment capital plan, as well as during the processes of payment, final settlement, inspection, and supervision of public investment capital. Agencies and units must carry out numerous overlapping procedures and processes, seeking input from many relevant agencies, levels, and sectors.

The draft State Budget Law (Consolidated) is structured based on the framework of the 2025 State Budget Law; provisions from the Public Investment Law have been streamlined, integrated, and incorporated into the corresponding chapters, articles, and clauses of the draft Law, while specific provisions regarding public investment programs, tasks, and projects are set forth in a separate chapter. Accordingly, the draft Law consists of 10 chapters and 102 articles.

In addition to provisions carried over from the State Budget Law and the Public Investment Law, the draft has amended and supplemented certain provisions. Specifically:

Amendments and Improvements

(1) Amendments and additions to provisions on the application of laws: (i) Clearly stipulate the management and use of State budget capital invested in enterprises in accordance with this Law and laws on State capital investment in enterprises; (ii) Clarifying that investment capital derived from the lawful revenues of state agencies and public service units—which does not fall within the scope of public investment—is governed by Government regulations and other relevant laws; (iii) Add provisions on the management and use of State budget capital in PPP projects implemented in accordance with this Law and laws on PPP project investment.

(2) Amend the definitions of development investment expenditures, budget reserves, budget surpluses, national target programs, public investment capital, and the annual public investment capital plan (to be renamed the annual public investment expenditure estimate).

(3) Amend and supplement regulations on revenue sources for the central government budget and local government budgets (revenue from the State Bank of Vietnam’s revenue-expenditure surplus, and revenue from the development of land funds in railway TOD areas); using local budget deficits for investment; decentralizing revenue sources and budget expenditure responsibilities among local budget levels; principles for issuing new policies and regulations and the responsibilities of budgets at all levels in issuing them; determining the amount of general and targeted supplementary allocations from higher-level budgets to lower-level budgets.

(4) Amend and supplement regulations on the use of contingency funds for projects outside the approved list and the five-year public investment expenditure ceiling; use additional revenue and remaining budgeted expenditures for important programs and tasks.

(5) Amend and supplement the timeframe and conditions for advances from the Financial Reserve Fund.

(6) Amend regulations on the five-year financial plan as follows: (i) Establish a separate chapter on the Five-Year Financial Plan, which specifies the scope, basis, requirements for preparation, report content, approval, and adjustments to the Five-Year Financial Plan; (ii) Integrate the contents of the “Five-Year Public Investment Plan” into the “Five-Year Public Investment Catalog and Expenditure Levels,” and incorporating it as a component of the Five-Year Financial Plan to establish a legal basis and closely align the Five-Year Public Investment Plan with the framework for balancing financial resources and managing fiscal risks under the Five-Year Financial Plan.

The Five-Year Financial Plan is no longer merely a “static” plan but a “dynamic” one, capable of being adjusted to closely track and adapt to socio-economic fluctuations, financial resource balancing, the State Budget, or the implementation requirements of the phase. Regarding public investment expenditures, in addition to being integrated into the 5-Year Financial Plan, there are separate adjustment provisions to ensure management requirements for these expenditures are met.

(7) Amend regulations to integrate the annual public investment plan into the annual public investment expenditure estimate to ensure consistency in management throughout the entire State Budget process for public investment, from planning, allocation, assignment, execution, settlement, to disclosure and oversight of the State Budget.

(8) Amend and supplement certain provisions to align with the consolidated content of the two Laws, including: (i) Expenditure responsibilities of the Central Government and local governments; (ii) Requirements for preparing the annual state budget estimate; (iii) Requirements and deadlines for the allocation and assignment of the State Budget; (iv) Adjustments to the State Budget and budgets already assigned to State Budget-using units; (v) Public disclosure of the State Budget and public oversight of the State Budget.

(9) Amend the provisions on budget expenditure items funded from two sources, as follows: Clearly categorizing expenditure items by task group and beneficiary, with allocations from “other development investment expenditures” and “recurrent expenditures,” and stipulating that such allocations may only be made if the expenditure has not yet been approved by the competent authority or if the allocation from the “public investment expenditures” source is insufficient.

(10) Amend the provisions on the timeline for preparing, drafting, consolidating, deciding on, and allocating the State Budget estimate as follows: (i) The Government submits the budget to the National Assembly at the final regular session of the year (without specifying a specific deadline); (ii) Adjusting the deadline for the Prime Minister to allocate the budget from November 20 to November 30.

(11) Amend the provisions on the organization of state budget expenditures as follows: (i) Add provisions regarding expenditure and advance payment deadlines (no later than December 31); and the handling of year-end budget expenditure surpluses and advance payment surpluses; (ii) Add responsibilities for financial agencies and the State Treasury to inspect the organization of expenditures.

(12) Amend regulations on the handling of temporary shortfalls in the State Budget Fund by adding and separating provisions for commune-level budgets; adjust advance payment sources and repayment deadlines (within 12 months).

(13) Amend regulations on the handling of year-end State budget revenues and expenditures and the transfer of State budget funds as follows: (i) Add provisions allowing, during the final settlement period, the continued payment of advances that meet budget expenditure criteria, as well as payment for tasks assigned in the expenditure estimate—including supplementary allocations made during the year— budget expenditures incurred on or before December 31 that have been recorded and settled in the budget year for which the budget was allocated. (ii) Review and narrow the scope of eligible items for budget reallocation (for public investment expenditures and expenditures for implementing social welfare policies); (iii) Standardize the timeframe for executing expenditures from transferred funds to no later than December 31 of the following year, except for funds used to implement policies on salaries, allowances, subsidies, and other payments calculated based on salaries;

(14) Amend the regulations on the deadlines and procedures for settling the State Budget: (i) Adjust the deadline for Level I budgetary units and provincial People’s Committees to submit reports from July 5 to July 10; The Ministry of Finance’s submission deadline from August 15 to August 20; (ii) The Government submits the final accounts to the National Assembly for approval at the year-end regular session.

Newly Added Provisions

(1) Add definitions for the five-year financial plan and public investment expenditure tasks to carry out investment preparation, planning, project implementation, and the timing of capital allocation for project implementation.

(2) Add provisions requiring the Ministry of Finance to report to the Prime Minister regarding adjustments to the list and levels of five-year public investment expenditures for programs, projects, and tasks that do not yet meet the conditions for implementation; the disbursement of annual budgets; and the addition of programs, tasks, new projects that have completed investment procedures and are eligible for annual budget disbursement (if any) in accordance with regulations, in order to establish a mechanism for flexibly evaluating and reallocating funds among tasks, projects, and public investment recipients to maximize the effectiveness of capital and avoid the situation of “hoarding funds”.

(3) Add provisions on the evaluation of public investment effectiveness, including the following:

The principle that the effectiveness of investment in programs, projects, and tasks must be evaluated throughout the entire process of planning, appraisal, approval, implementation, and post-investment operation and utilization. The evaluation of investment effectiveness must be aligned with socio-economic development goals, ensure national defense and security, enhance infrastructure capacity, and improve the standard of living and social welfare enjoyed by the people; the process for evaluating investment effectiveness shall be carried out in accordance with Government regulations.

The duties and authorities of ministries, localities, agencies, and units in evaluating the effectiveness of public investment, from the proposal and project development stages through implementation and the disbursement of funds in accordance with the allocated budget.

The duties and powers of ministries, ministerial-level agencies, and other central agencies regarding the issuance and guidance of investment effectiveness evaluation criteria within their respective sectors and fields of responsibility.

The duties and powers of the project owner in organizing the management and implementation of public investment programs and projects to ensure they meet the objectives, schedule, quality, and effectiveness of the programs and projects; managing and using the state budget allocated for public investment and ensuring disbursement in accordance with the approved budget; reporting and providing information on programs and projects as required.

The rights and responsibilities of relevant agencies, such as the Project Management Board, design consulting organizations, and agencies or organizations responsible for appraising programs and projects.

(4) Supplement the duties and powers of the Government regarding: (i) Developing and submitting to the Standing Committee of the National Assembly for issuance of a Resolution on the Regulations governing the review and approval of the national five-year financial plan, the state budget estimate, the central government budget allocation plan, and the approval of the annual state budget settlement; (ii) Prescribing regulations on the review and approval of the five-year financial plans of provinces and cities, their annual budgets and allocations, and the approval of their annual settlement of accounts;

(5) Add the responsibilities of the Ministry of Science and Technology in: (i) Compiling and proposing, then submitting to the Ministry of Finance for consolidation and submission to the Government; and for the Prime Minister to decide on allocations within his authority from sources such as unallocated budget estimates, contingency reserves, revenue surpluses, and remaining expenditure estimates of the Central Government Budget allocated for expenditure tasks in the fields of science, technology, innovation, and digital transformation; (ii) Providing guidance, compiling, and proposing the total five-year public investment expenditure from the State Budget for the fields of science, technology, innovation, and digital transformation, including the Central Government Budget and local budgets; the list and levels of five-year public investment expenditures from the Central Government Budget for the fields of science, technology, innovation, and digital transformation of ministries, ministerial-level agencies, other central agencies, and localities to ensure compliance with Resolution No. 57/NQ-TW and relevant legal provisions.

(6) Add provisions on the application of information technology and digital transformation in State Budget management to align with Resolution No. 57/NQ-TW and management requirements.

(7) Add principles for managing State Budget loans that are consolidated into the State Budget fund for use in development investment and to ensure compliance with debt borrowing principles as prescribed by law.

(8) Add provisions on the allocation of revenue sources and expenditure responsibilities between provincial and commune-level budgets to establish a stable, long-term allocation ratio and ensure that commune-level budgets have sufficient resources to proactively carry out their assigned tasks; and establish a mechanism for adjusting the ratio in the event of fluctuations.

(9) Add provisions allowing for the use of actual revenue exceeding the budget estimate, as determined by the National Assembly and the People’s Council, during the implementation of the State Budget.

(10) Add provisions regarding the use of contingency reserves, the Financial Reserve Fund, and sources of increased revenue, as well as remaining budgeted expenditures at each budget level, to fund emergency response and recovery efforts in the interest of the nation and the people, and to stabilize the macroeconomy, in line with actual implementation conditions.

The draft is currently open for public comment on the Ministry of Finance’s official website./.

PL