Public debts surpass its peak, says Finance Minister

Minister of Finance Dinh Tien Dung

Minister Dung made the point later last week while explaining issues on budget collection, development spending, public debts, and issuance of Government bonds.

Minister Dung stressed that the country encountered mountains of budget difficulties. As budget plan was attached with the preset goal of 7-7.5% GDP growth rate. However, GDP norms were adjusted to 6-7%. In practice, GDP growth rate was about 5.91% in the 2011-2015 period. Record low crude oil prices and tariff cuts in line with international commitments also led to smaller budget collection.

In addition, budget collection was declined due to policy amendments ahead of schedule in favor of business development. Specifically, corporate income tax was cut from 25% to 22%. SMEs have been imposed only 20% of corporate income tax since 2013. Earlier, the tax reduction roadmap had been decided by 2020. Moreover, the adjustment of family allowances in personal income tax also made State budget collection shrink.

However, according to Minister Dung, State budget collection grew 1.95 times in the 2011-2015 period in comparison with the 2006-2010 period.

Budget collection showed positive signs. Total domestic budget collection grew from 61.5% in 2011 to 75% in 2015; 79% in 2016; and is expected to fetch 81.7% in 2017.

Contribution of crude oil revenue dropped in total State budget collection. Out of total State budget collection, crude oil accounted for 15.3% in 2011; to 3.6% in 2016; and was forecast to only 3.2% in 2017.

Density of export and import collection dropped from 21.6% in 2011 to only 15.7% in 2016; and was projected to only 14.8% in 2017.

Regarding budget overspending, Minister Dinh Tien Dung said that in the 2014-2016 period, the NA issued additional VND 170 trillion of Governmental bonds. In addition, ODA disbursement was higher than forecast with VND 142 billion on infrastructure.

Minister Dung attributed the issuance of Governmental bonds and high disbursement which led to budget overspending to high public debts. In 2011-2015, public debt rate was estimated at 5.8%, higher  than the preset goal of 5%.

In 2016-2017, public debt was put under control in “a progressive” manner by extension of deadline for Government bond issuance. The deadline was expanded from three years in 2013 to eight years in 2016, then 15.6 years in 2017.  

So far, Viet Nam also has succeeded in pushing debt peak. In 2014, there was worries about a debt peak in 2016. However, so far, the debt peak was removed.

The MoF has taking every measures to restructure budget collection.

Minister Dung also announced a plan to submit a bill on asset tax; tighten spending especially regular expenditure; exercise thrift-practice; and manage tax collection./.

By Kim Loan