Vietnam’s budget deficit is expected to jump to VND100 trillion (US$5.917 billion) this year as its main incomes from crude oil exports are likely to drop sharply while the government is loosening fiscal spending and breaking taxes, leading economists have warned.
To offset the coffer shortfall, the government has no options but borrow public debts, which have been warned of dual wastes in recently years, the state-run Tien Phong (Vanguard) newspaper cited PhD Le Tham Duong of Ho Chi Minh City Banking Academy and Truong Thi Mai, head of Committee for Social Affairs.
Trillions of the dong worth of bonds is kept in state coffer and treasuries due to slow disbursements, which cause dual wastes as the government has to pay coupons, the economists said.
Last year, Vietnam disbursed VND22 trillion, or 62 per cent of VND35.483 trillion worth of g-bonds. In 2007, Vietnam raised VND22 trillion worth of bonds, and spent only VND7 trillion of which.
Between 2003 and 2008 Vietnam had issued a total of VND300 trillion worth of g-bonds, of which it disbursed only VND60 trillion.
Regarding dollar-denominated bond issuances the government has recently announced, Pham Do Chi, chief economist of VinaCapital warned of pending risks if the dong depreciates against dollar after one year.
A director of a foreign investment management fund said the State Bank of Vietnam confirmed no plans to devalue the dong, which will minimize risks of dollar bonds issuances, the paper said.
The government has just announced to pump up to VND300 trillion of state budget into infrastructure and exports, as part of stimulus packages to ward off the downturn.
According to Bloomberg, this is part of the government’s VND491 trillion overall budget for this year, 23 per cent higher than VND399 trillion projected for 2008.
However, Vietnam’s national assembly approved cutting budget deficit to 4.82 per cent of the country’s GDP value, lower than 4.95 per cent last year. (Pioneer, Bloomberg)
Vietnamese
