Vietnam’s 2015 budget deficit at 6.1 percent of GDP

By An Hong   March 15, 2016 | 02:09 pm GMT+7

The Vietnamese government ran a budget deficit of VND256 trillion ($11.5 billion) or 6.1 percent of gross domestic product (GDP) in 2015, according to a government report released on Tuesday.

The National Assembly has tried to place a cap on the budget deficit in recent years, but state budget expenditure has remained higher than targeted. Official figures show the budget deficit stood at 4.4 percent in 2011, 5.36 percent in 2012, 6.6 percent in 2013, 5.69 percent in 2014 and 6.1 percent last year.

A slump in crude prices has cut revenue from oil considerably. Government statistics show that crude-related revenue, which made up 30 percent of the nation’s budget in 2005, fell to a fifth in 2010 and accounted for about 10 percent last year. The revenue from oil in the first two months of this year fell sharply by around 60 percent to $2.6 million from the same period last year.

Low oil prices have made it difficult to reach the target of a balanced budget, said Finance Minister Dinh Tien Dung at the National Assembly's meeting session on Tuesday, adding that it was like “walking a fine line”.

He also announced plans to reduce the state budget deficit by raising revenues from taxes and the privatization of state-owned firms, without giving a timeline.

Under the plan to restructure state-owned enterprises between 2011 and 2015, the government estimated the value of its divestment from state companies would be worth VND150 trillion.

The government also plans to make adjustments to eight tax policies that will help prevent an expected VND45 trillion budget shortfall.

Government revenue in the first two months of this year edged up by 2.4 percent to VND160 trillion ($7.2 billion) from the same period last year, said the Ministry of Finance on its website.

The increase, although not significant, is mainly due to domestic sources other than oil that added an additional VND140 trillion, up nearly 13 percent from last year.