Vietnam Fiscal Deficit Keeps Widening; Debt Ceiling Breach Looms

Tuan Minh

10:27 28/07/2016

BizLIVE - Vietnam’s state budget deficit is on the rising, bringing its public debt closer to the safety threshold.

Vietnam Fiscal Deficit Keeps Widening; Debt Ceiling Breach Looms

A motorbike taxi driver waits for a customer in front of the Crown Casino in Danang, Vietnam. Photo: Hoang Dingh Nam/AFP/Getty Images

Vietnam posted a state budget deficit of 105.6 trillion dong ($4.73 billion) in the year to July 15, rising 27.38% from a month earlier, triggering concerns that its public debt would soon touch the upper limit.
According to the General Statistics Office (GSO), the government collected 500.8 trillion dong ($22.42 billion) for state coffers in the period, meeting 49.4% of this year’s plan.
Of the amount, revenues from taxes and fees reached 397.3 trillion dong ($17.8 billion), or 50.6% of the plan, while revenues from crude oil were 21.6 trillion dong ($967.3 million), meeting 39.6% of the year’s estimate.
Budget expenditures were estimated at 606.4 trillion dong ($27.15 billion), or 47.6% of this year’s plan. Of the sum, spending for development project met 35% of the plan, at 89.4 trillion dong ($4 billion).
The government spent 81.6 trillion dong ($3.65 billion) on repaying debts and aids in the six-month-and-a-half period, or 52.6% of the plan.
A report of the Central Institute for Economic Management showed that Vietnam’s fiscal deficit, above 6% in 2015, is higher than that of several regional countries.
In the World Bank’s latest update released earlier this month, Vietnam’s fiscal deficit of projected to stay at 5.9% of GDP this year before sliding to 5.7% in 2017, compared to 6.5% in 2015.
The country’s public debt is set to increase from 62.2% of GDP in 2015 to 64.1% in 2016 and 64.8% in 2017. Vietnam sets the safety threshold for public debt at 65% of GDP.
In a report submitted to the National Assembly, the Vietnamese government forecast public and government debt would breach the limits by the end of this year as the country’s GDP grew 5.52% in the first half of this year, compared to 6.32% in the same period of 2015.