Vietnam is warned to grapple with a hefty state budget deficit this year as it plans to implement stimulus packages worth US$8 billion, according to the Ministry of Finance.
This year, Vietnam’s state budget incomes are estimated to be slashed with US$1.7 billion-US$3.7 billion, the MOF said.
In the first four months, Vietnam’s state budget incomes were down 20 per cent compared with 2008, the MOF noted.
First Deputy Prime Minister Nguyen Sinh Hung told the National Assembly, which started a one-month working session from May 20, state budget incomes between January and April were estimated at VND120.1 trillion, 30.8 per cent of the year’s target and down 18 per cent on year.
Meanwhile, Vietnam’s budget spending was up 3.3 per cent compared with that last year, Mr Hung said.
The government has just proposed the assembly cut GDP growth to 5 per cent, allow state budget to widen to 8 per cent of the country’s GDP for 2009 and approve plans to issue additional VND20 trillion of g-bonds.
“It is reasonable the government accepts higher state budget deficit when pursuing demand stimulus policies to head off the economy,” said Vu Dinh Anh, a leading economist and vice dean of the MOF’s Institute for Market and Prices Research.
The government is always pressured when issuing g-bonds to raise funds as financial institutions put coupons higher, Anh said.
Issuing huge g-bonds, which are unspent or ineffectively used, will cause wastes and increasing burdens of the state budget, Anh emphasized, however.
Anh also called for supervising measures on the government’s demand stimulus packages.
Vietnam has failed to issue g-bonds in recent auctions as bonds are less attractive than shares posting sharp rally while bond yields set by the MOF are low.
The government has announced its plans to raise between US$25 billion and US$27 billion of medium- and long-term foreign loans from now to 2012, up 65 per cent compared with 2005-2008 period, the government of Vietnam said on its Website. (The People, chinhphu.vn)
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