Low Oil Prices Hurt Vietnam State Budget

Minh Tam

11:31 30/10/2015

BizLIVE - Vietnam has been struggling with the widening fiscal deficit due to dwindling revenues from crude oil despite a rise in oil output.

Low Oil Prices Hurt Vietnam State Budget
Vietnam fetched 55.5 trillion dong ($2.47 billion) from crude oil in the ten months through October, falling 37.7% from the comparable period of 2014, the Ministry of Finance has said.
The price of crude oil was $58.4 a barrel on average in the period, compared to the initial projection of $100 a barrel.
Data of the General Statistics Office showed that Vietnam produced 14 million tons of crude oil in the ten-month period, representing a 10.4% year-on-year increase.
According to preliminary calculations, Vietnam’s central state budget will fall short of 63 trillion dong ($2.8 billion) this year in comparison with the initial estimation, due to the oil crash.
The unexpected headwinds coming from the global oil market have prompted the Vietnamese government to take unprecedented and rare steps.
It has planned to sell another $1 billion worth of USD-denominated bonds to Vietcombank, where it holds a 77.11% stake, after making a similar move in April. In addition, the government has proposed issuing $3 billion worth of long-term sovereign bonds abroad for rollovers.
Besides selling Treasury bills which have terms shorter than 52 weeks, it has also asked for permission to issue less-than-five-year bonds in the dong after bond sales in the January-September period met just a half of the year’s plan. It has taken out a loan worth 30 trillion dong from the State Bank of Vietnam.
Going further, it has planned to divest entirely from ten profitable companies including the top dairy firm Vinamilk and software producer FPT Corp. The government could rake in at least $4 billion from these withdrawals.
The Finance Ministry added that state budget collections likely increased 6.3% year-on-year to 777 trillion dong ($34.53 billion) between January and October, meeting 85.3% of the year’s plan.
Meanwhile, budget expenditures reached 918.4 trillion dong ($40.82 billion), resulting in a fiscal deficit of 141.4 trillion dong, or 62.6% of the year’s target.