Government receives six suggestions to minimise financial risks
The Finance Ministry this week presented six suggestions to the government to minimise financial risks and ensure the country’s financial stability, as per the requirement of the State Finance Discipline Act of 2018.
A Cabinet meeting on June 18 acknowledged the ministry’s report on financial risks for fiscal year 2024, which is prepared in March every year as mandated by the act.
The suggestions submitted this week highlight:
1. Prioritising the reduction of the fiscal deficit back to the normal level of not more than 3% of GDP, in a bid to restore fiscal headroom to handle potential future crises. Regarding the incurring of new debts, priority should be given to projects that lead to sustainable economic and social development.
2. Pushing forward structural reforms of tax and revenue collection to achieve tangible results, enhancing debt repayment capabilities and preparing for declining revenue collection due to changing economic structure and consumer behaviour. This includes reviewing tax exemptions, deductions, as well as measures to help reduce people’s energy cost burden.
3. Consider reducing unnecessary expenditure through reforming the size and efficiency of the public sector workforce. Reform the public welfare systems by integrating data and coordinating operations of related agencies, enabling efficient implementation of the conditional transfer welfare system. Prioritise government projects based on their importance, continuation, and ability to plan the spending ahead.
4. Allocate sufficient budget for expenditures with clear obligations to ensure effective management, as well as adjust the repayment of the principal amount to align with increasing debt.
5. Allocate a budget for outstanding government contributions to the Social Security Fund, as well as consider measures to ensure long-term sustainability of the fund, such as extending the retirement age and wage ceiling, and revising the contribution rates.
6. Improve the efficiency of revenue collection among local administration organisations as well as expand their tax bases. Support these organisations in utilising revenue surplus to develop the local communities and find additional revenue sources, paving the way for sustainable, self-reliant local administration.
