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8M State budget deficit at $5bn

Released at: 11:37, 05/09/2016

8M State budget deficit at $5bn

Photo: Duc Anh

Falling revenue from crude oil and changes from FTAs add to deficit woes.

by Duy Anh

The State budget deficit in the first eight months of this year stood at VND111.5 trillion ($5 billion), the latest figures from the General Statistics Office (GSO) reveal.

State budget revenue and spending during the period were VND603.7 trillion ($27 billion) and VND715.2 trillion ($32.05 billion), respectively.

Tax revenue from domestic business activities reached VND486.2 trillion ($21.8 billion), equal to 61.9 per cent of the annual plan, from crude oil VND24.6 trillion ($1.1 billion), or 45.2 per cent, and from import and export activities VND90.2 trillion ($4 billion), or 52.4 per cent.

Revenue remained low in the period due to the “effect of low crude oil prices and the impact of the change in direction of Vietnam’s trade activities when joining foreign trade agreements (FTAs),” according to GSO General Director Mr. Nguyen Bich Lam.

Some tax revenue from domestic business activities were higher than expected, with land use fees reaching VND48.3 trillion (2.16 billion), equal to 96.7 per cent of the annual plan, while industry and trade activities (excluding State-owned enterprises, or SOEs) contributed VND97.4 trillion ($4.36 billion), equal to 67.9 of the plan.  

Personal income tax payments totaled VND42.4 trillion ($1.9 billion), equal to 66.7 per cent of the annual plan, environmental taxes VND25 trillion ($1.12 billion), or 65.1 per cent, and tax payments from foreign-invested enterprises (excluding crude oil) VND97.1 trillion ($4.35 billion), equal to 61.1 per cent of the plan.

Notably, tax revenue from SOEs stood at VND126.1 trillion ($5.65 billion), equal to just 49.2 per cent of the annual plan. “This is due to corporations and companies within the petroleum, coal, mineral and hydroelectric sectors facing difficulties in their operating and manufacturing activities,” Mr. Lam said.

Budget spending in the period stood at VND715.2 trillion ($32.05 billion), equal to 56.2 per cent of the annual plan. Spending on investment and development was VND107.2 trillion ($4.8 billion), equal to 42.1 per cent. Spending on socioeconomic, national defense and security, and administrative management was VND506.7 trillion ($22.7 billion), or 61.5 per cent of the plan, while spending on debt repayments and donations reached VND 96.2 trillion ($4.3 billion), or 62 per cent.

The State budget deficit therefore came in at VND111.5 trillion ($5 billion) in the period. The deficit for the year as a whole has been forecast to increase to 6.5 per cent of GDP.

Government debt, meanwhile, was reported at VND1,830 trillion ($86 billion) in 2014, double the figure in 2010, according to the Ministry of Finance (MoF)’s latest report released in June. Domestic debt was more than VND1,000 trillion ($47 billion) and foreign debt some VND800 trillion ($39 billion). The cost of servicing government debt in 2014 alone was VND260 trillion ($11.8 billion).

Government debt represented 50.3 per cent of the country’s GDP as at December 31, 2015, MoF’s figures show, exceeding the 50 per cent cap set by the National Assembly for the last five years.

The state of the economy from now to the end of the year remains difficult to forecast. “MoF will cooperate with authorities to strengthen tax policy, including fighting tax evasion, smuggling, and trade fraud,” Mr. Nguyen Dai Tri, Deputy Head of the General Department of Taxation (GDT) was quoted as saying.

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