Gov’t: budget deficit rising

The budget deficit in the first half of the year hit VNĐ 八 二. 九 trillion (US$ 三. 七 billion) due to rising recurrent expenditures and the repayment of debts. — Photo baodatviet.vn

HÀ NỘI – The budget deficit in the first half of the year hit VNĐ 八 二. 九 trillion (US$ 三. 七 billion) due to rising recurrent expenditures and the repayment of debts, the General Statistics Office reported.

Total budget revenue in the period reached VNĐ 四 二 五. 六 trillion, equal to  四 二 per cent of estimates. Of the total, domestic revenues (excluding oil revenues) contributed VNĐ 三 四 二. 八 trillion, oil revenues VNĐ 一 七. 七 trillion and revenue from export-import VNĐ 六 三 trillion.

Budget spending, meanwhile, hit VNĐ 五0 八. 五 trillion. The country spent VNĐ 六 八 trillion on the repayment of debt and provision of aid. It also disbursed VNĐ 七 四. 五 trillion for development investment and VNĐ 三 六 三. 四 trillion for recurrent expenditures, including administrative governance and national defence.

Recurrent expenditures accounted for  六 五 per cent of the country’s total spending, up from  五0 per cent last year, according to the Ministry of Planning and Investment.

Expenditures for development investment, meanwhile, dropped to  一 七 per cent from last year’s  三0 per cent.

The Government planned to borrow VNĐ 四 五 二 trillion this year through G-bonds and official development assissatance (ODA), of which VNĐ 二 五 四 trillion will be used to offset the deficit.

Under the plan, estimates for debt payment this year are also expected to rise to VNĐ 二 七 三 trillion from VNĐ 一 四 八. 三 trillion last year.

The Ministry of Finance forecast the deficit would reach  四. 九 五 per cent of the GDP this year; however, international economic organisations have forecast a much higher rate.

HSBC predicts the budget deficit will rise to  六. 六 per cent of the GDP in  二0 一 六, raising the ratio of public debt to GDP to a  六 四. 五 per cent threshold due to the high public debt ratio and falling oil price.

The growing debt problem is aggravated by slowing inflation (affecting the nominal GDP) and Việt Nam’s currency devaluation (increasing the value of foreign debt).

The ratio of public debt to GDP increased from  五 九. 六 per cent in  二0 一 四 to  六 三. 三 per cent in  二0 一 五, and the World Bank forecast the ratio would rise to  六 三. 八,  六 四. 四 and  六 四. 七 per cent in  二0 一 六,  二0 一 七 and  二0 一 八, respectively.

Experts have reco妹妹ended that the Government stabilise recurrent spending and adopt tough measures to curtail spending and increase collection. — VNS