In a worse scenario where GDP would expand 3.6% this year, Vietnam’s fiscal deficit is forecast at 5.02% of GDP and public debt at 56.4%.
In two growth scenarios set by the government for this year, Vietnam’s public debt and fiscal deficit indicators in the 2016 – 2020 period would stay below the ceilings of 65% and 3.9% of GDP, respectively, which were set by the National Assembly (NA), according to Minister of Finance Dinh Tien Dung.
|Minister of Finance Dinh Tien Dung assured that Vietnam’s fiscal deficit, public debt stay within limit set in 2016-2020 plan. Photo: Quochoi.vn|
For the first scenario where Vietnam’s GDP growth is forecast at 4.5%, the budget deficit would be around 4.73% of GDP (representing an increase of VND75 trillion (US$3.25 billion) compared to the year’s estimate), and public debt at 55.5% of GDP, Dung informed at a NA’s sitting on June 15.
In a worse case with a slower economic expansion of 3.6%, the fiscal deficit will likely be 5.02% of GDP, or VND90 trillion (US$3.9 billion) higher than the estimate, and public debt at 56.4% of GDP, Dung stated.
According to Dung, the Covid-19 pandemic has had a major impact on the state budget revenue this year.
Vietnam’s state budget revenue decreased 9.2% year-on-year to VND577 trillion (US$24.69 billion), meeting 38.2% of the year’s estimate, in the first five months of 2020, Dung informed, adding this is the lowest percentage since 2014.
Dung forecast the government would not meet its state revenue plan for 2020. In this case, the government would readjust all expenditure targets in compliance with the Law on State Budget.
From now on until the end of the year, Dung urged government agencies to tighten regular spending, including at least 70% reduction in expenditures for working trips and conferences, workshops, as well as an additional cut of 10% in regular spending.
So far, government support in forms of waiving and freezing payment of taxes is estimated at VND200 trillion (US$8.68 billion), including a five-month payment deferral of taxes and land rental fees for affected enterprises and household businesses; waiving import taxes for medical equipment and products for the Covid-19 fight, input materials for enterprises in fields of textile, agriculture, supporting industries, automobile, among others; a 30% cut in corporate income tax for small and medium enterprises; 50% reduction in auto registration fees; among others.