Budget deficit rising: GSO

Illustrative image. ​(Photo: baodatviet.vn)

Total budget revenue in the period reached 425.6 trillion VND, equal to 42 percent of estimates. Of the total, domestic revenues (excluding oil revenues) contributed 342.8 trillion VND, oil revenues 17.7 trillion VND and revenue from export-import 63 trillion VND. 

Budget spending, meanwhile, hit 508.5 trillion VND. The country spent 68 trillion VND on the repayment of debt and provision of aid. It also disbursed 74.5 trillion VND for development investment and 363.4 trillion VND for recurrent expenditures, including administrative governance and national defence. 

Recurrent expenditures accounted for 65 percent of the country’s total spending, up from 50 percent last year, according to the Ministry of Planning and Investment. 

Expenditures for development investment, meanwhile, dropped to 17 percent from last year’s 30 percent. 

The Government planned to borrow 452 trillion VND this year through G-bonds and official development assistance (ODA), of which 254 trillion VND will be used to offset the deficit. 

Under the plan, estimates for debt payment this year are also expected to rise to 273 trillion VND from 148.3 trillion VND in 2015. 

The Ministry of Finance forecast the deficit would reach 4.95 percent of the GDP this year; however, international economic organisations have forecast a much higher rate. 

HSBC predicts the budget deficit will rise to 6.6 percent of the GDP in 2016, raising the ratio of public debt to GDP to a 64.5 percent threshold due to the high public debt ratio and falling oil price. 

The growing debt problem is aggravated by slowing inflation (affecting the nominal GDP) and Vietnam’s currency devaluation (increasing the value of foreign debt). 

The ratio of public debt to GDP increased from 59.6 percent in 2014 to 63.3 percent in 2015, and the World Bank forecast the ratio would rise to 63.8, 64.4 and 64.7 percent in 2016, 2017 and 2018, respectively. 

Experts have recommended that the Government stabilise recurrent spending and adopt tough measures to curtail spending and increase collection.