Discussions arose when Minister of Planning and Investment Bui Quang Vinh on October 20 said that Vietnam will have 255.75 trillion Vietnamese dong ($11.37 billion) for socio-economic development projects in 2016.
After allocations for local governments, the central budget will have just 45 trillion dong ($2 billion) left for socio-economic development projects. “We don’t know what to do with this amount, while debt repayments are pending,” the minister noted.
A few days later, Deputy Finance Minister Do Hoang Anh Tuan clarified that the government will have up to 95 trillion dong available for “development projects” if 50 trillion dong in official development assistance (ODA) is taken into account.
In other words, of the aforementioned 95 trillion dong, the Ministry of Planning and Investment can manage 45 trillion dong while 50 trillion dong in ODA will be “automatically” disbursed under accords Vietnam has signed with donors.
The amount of 45 trillion dong is actually the money that will be used to finance development projects.
According to a government plan recently forwarded to the National Assembly, Vietnam’s supreme legislative body, the nation’s state budget revenue is projected at 1,014.5 trillion dong ($45.1 billion) in 2016.
Budget expenditures are planned at 1,268.5 trillion dong ($56.38 billion) next year, causing budget overspending to amount to 254 trillion dong, up 28 trillion dong from that in 2015.
Economist Le Dang Doanh, former director of the Central Institute for Economic Management (CIEM), told the BizLIVE newspaper that Minister Vinh wanted to sound alarm bells over the scarcity of liquidity in the state budget.
Meanwhile, the 50-trillion-dong amount in ODA has already been assigned to determined projects and cannot be used for other purposes. “The problem is whether it is effectively used or not,” Mr. Doanh added.
The Vietnamese government is struggling with dwindling budget collections as crude oil prices have been half of the projected $100 a barrel and import tariffs are cut under free trade agreements.
To offset the fiscal deficit, it has put forwards a series of proposals, including reducing regular expenditures, using proceeds from selling state stakes in profitable companies, and issuing sovereign bonds overseas. The Ministry of Finance has taken out a loan worth 30 trillion dong from the State Bank of Vietnam.