Photo: Thanh Duc
Deficit of $2,96 billion in first five months prompts calls for stricter budget control.
Vietnam’s budget deficit for the first five months of 2016 was VND66.4 trillion ($2.96 billion), the General Statistics Office has announced.
Revenue from January to May of VND346.2 trillion ($15.7 billion) was exceeded by spending of VND412.6 trillion ($18.7 billion). The government has previously projected budget revenue for 2016 of VND1,019.2 trillion ($45.86 billion) with total spending of VND1,273.2 trillion ($57.3 billion), resulting in a deficit of VND254 trillion ($11.5 billion), or 4.95 per cent of GDP.
So far this year Vietnam has spent VND55 trillion ($2.5 billion) on foreign debt settlement. It also put VND64.2 trillion ($2.91 billion) into development projects and VND293.4 trillion ($13.3 billion) into national defense and administrative governance.
Tumbling crude oil prices have cut budget revenue considerably, with revenue from oil in the first five months of 2016 falling sharply to VND13.9 trillion ($631 million), accounting for only 4 per cent of total budget revenue.
According to Mr. Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research, taxes and tariffs will be reduced considerably as many free trade agreements Vietnam has signed will come into effect shortly. Lower tax revenues from import-export duties will have a significant impact on budget revenue collection.
Authorities are under intense pressure given that the budget deficit for the first five months of the year was $2.96 billion. Attention therefore should be paid to intensifying the supervision and transparency of budget use.
Prime Minister Nguyen Xuan Phuc has asked the Ministry of Finance (MoF) to step up measures to bolster State budget revenue. Among the measures, accelerating the equitization of State-owned enterprises, keeping public debt under control, and creating a favorable business environment to attract foreign investment have high priority.
The PM also encouraged the socialization of State-run education, healthcare and other public services so that the number of people on the State payroll can be cut, easing the pressure on the State budget.
There is also an urgent need, the PM stressed, to decentralize State funds from the central government to local governments. This comes from the fact that Vietnam will find it more challenging to gain preferential loans and official development assistance (ODA) following the World Bank’s announcement that it will cut its ODA to Vietnam before July 2017.