Vietnam Seeks State Stake Sales to Offset Fiscal Deficit

Tuan Minh

09:32 21/10/2015

BizLIVE - The Vietnamese government has asked for parliament approval to unload state stakes in local companies to make up for the fiscal shortfall this year.

Vietnam Seeks State Stake Sales to Offset Fiscal Deficit

The government has asked for permission to use proceeds booked from state holding sales to offset the fiscal deficit.

The government on Tuesday proposed using some 10 trillion Vietnamese dong ($444.5 million) out of the proceeds gained from selling state holdings in equitized companies, to offset an estimated deficit of 31 trillion dong in the state budget in 2015.
The government also asked for permission to use 30 trillion dong worth of stakes withdrawn from state-held firms to offset the fiscal deficit next year.
“These are one-time collections, thus ensuring the state budget will be more challenging from 2017 onwards,” said Finance Minister Dinh Tien Dung.
Vietnam’s selling crude oil prices are expected at $56.7 a barrel on average this year, compared to the initially projected $100/barrel, resulting in a possible shortfall of 63 trillion dong in revenues from crude oil this year, according to a government report.
State-run energy firm PetroVietnam has estimated its contribution to state coffers would be 115 trillion dong this year, 44 trillion dong lower than the initial target of 159 trillion dong due to slumping oil prices.
Moreover, government bond (G-bond) sales dropped sharply year-on-year in the first 9 months of this year to 127 trillion dong, meeting 51% of the year’s issuance plan.
The weaker demand for G-bonds was attributed to the parliament's requirement to issue five-year-and-longer securities, and a central bank regulation that limits banks’ use of short-term capital for investment in G-bonds.
To deal with the fiscal deficit and restructure the nation’s public debt, the government has proposed selling less-than-five-year bonds at home and long-term notes overseas.
State Capital Investment Corporation, the government’s investment arm, has received a nod to unload state stakes in ten companies which include major blue-chips such as dairy producer Vinamilk (VNM), software manufacture FPT Corp (FPT) and insurer Bao Minh Corporation (BMI). SCIC is estimated to book at least $4 billion from withdrawals from the ten firms.
The Ministry of Finance has unveiled plans to issue $3 billion worth of sovereign bonds to international investors starting 2017 to roll over existing debts.
Vietnam’s state budget deficit is projected at 226 trillion dong this year, or 5.0% of gross domestic product (GDP).
The country’s public debt would increase to 61.3% of GDP in 2015 from 59.6% in 2014, below the permitted limit of 65% of GDP.
The fiscal deficit is planned at 254 trillion dong in 2016, equivalent to 4.95% of GDP, causing public debt to rise to 63.2% of GDP.


Từ khóa: Vinamilk, FPT