Vietnam pays back $3 billion on foreign debts during first half of 2016

By Bach Duong   June 29, 2016 | 05:50 pm GMT+7

Vietnam's government spent more than VND68 trillion ($3 billion) to pay back foreign debts in the first six months of this year, said the General Statistics Office on its website.

Vietnam ran a budget deficit of VND83 trillion ($3.7 billion) from January through June, the statistics office said.

Budget revenue in the first six months of this year reached VND425.6 trillion, equal to 42 percent of the target for this year.

Slumping crude oil prices have cut budget revenue considerably. Government statistics show that crude-related revenue, which made up 30 percent of the nation’s budget in 2005, fell to 20 percent in 2010 and accounted for about 10 percent in 2015.

Revenue from oil in the first half of the year fell sharply to VND17.7 trillion.

Crude oil export income from January to June fell 46.6 percent from a year ago to $1.13 billion with output over the same period down 23 percent to an estimated 3.57 million tons or 144,000 barrels per day.

Vietnam has spent VND68 trillion so far this year to pay back foreign debts, VND74.5 trillion on development projects and VND363.4 trillion on national defense and administrative governance.

Prime Minister Nguyen Xuan Phuc recently approved a plan on how Vietnam will pay back foreign debts and secure new loans to offset the state budget deficit and raise funds for government spending.

Under the plan, the Vietnamese government will set aside VND273.3 trillion (around $12 billion) for debt repayments, of which 35 percent, equivalent to about $4 billion, will be used to roll over principal loans.

The Ministry of Planning and Investment said that the government’s consumption spending has soared to 65 percent of total expenditure, while investment funds have dropped to 17 percent from 30 percent.

The World Bank forecasts that Vietnam’s public debt will climb to 63.8 percent of the country’s gross domestic product in 2016, 64.4 percent in 2017 and 64.7 percent in 2018.

Last year’s public debt was estimated at 62.2 percent of gross domestic product, which was relatively close to the ceiling of 65 percent set by the National Assembly.

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