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Government targets 6.5-7% growth for 2016-2020

Released at: 11:05, 09/03/2016

Government targets 6.5-7% growth for 2016-2020

Plans submitted to National Assembly on targets for next five years.

by Hung Khanh

The government has set targets for economic growth of between 6.5 and 7 per cent and total GDP of between VND30,621 trillion ($1.37 trillion) and VND31,487 trillion ($1.41 trillion) over the next five years.

In a report submitted to the National Assembly recently, the government plans that in the 2016-2020 period State budget revenue will account for 21.8 per cent of GDP, with tax and fee collections representing 20.2 per cent. The State budget in the 2016-2020 period is targeted at 1.6-times higher than in the previous period, in which domestic revenues, excluding land use fees, will be at least double, thus increasing revenue from domestic sources to 2020 to 80 per cent of total budget revenue. Budget revenues from domestic sources are to be increased and revenues from crude oil and trade reduced.

Budget spending over the next five-year period is expected to account for 25.7 per cent of GDP, or 1.5 times higher than in the previous five-year period.

The government asked to continue with State budget restructuring in order to maintain economic development and secure national defense and social security while reducing spending. Part of the revenues from equitizing State-owned enterprises (SOEs) will be used to reinvest in infrastructure development, healthcare, and education. Accordingly, the government sets a target for 2020 of keeping spending on development to 30 per cent of total spending and the budget deficit to under 4 per cent of GDP.

On balancing budget revenues and spending, the government targets that by 2020 public debt should not account for more than 65 per cent of GDP, government debt not more than 55 per cent, and foreign debt not more than 50 per cent.

In order to maintain economic growth of 6.5 - 7 per cent for the 2016-2020 period the government plans for total investment to be between VND9,744 trillion ($437.21 billion) and VND10,676 trillion ($479.03 billion), accounting for 32 to 34 per cent of GDP. Investment from the budget is expected at VND2,106 trillion ($94.49 billion), credit provided by the State at VND375 trillion ($16.82 billion) to VND395 trillion ($17.72 billion), investment from SOEs at VND1,180 trillion ($52.94 million), and investment from public and private enterprises at VND4,388 trillion ($196.88 billion) to VND5,065 trillion ($227.26 billion).

Foreign direct investment (FDI) is expected to contribute VND1,583 trillion ($71.02 billion) to VND1,639 trillion ($73.54 billion) and other sources from VND112 trillion ($5.02 billion) to VND129.8 trillion ($5.82 billion). Official development assistance (ODA) and preferential loans over the next five years are expected to reach $20-$25 billion.

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