The main areas for budget spending are for administrative functions and public debt. These cost nearly 70% of budget spending. Paying public debt currently consumes all of the country’s budget revenue.
According to a recent World Bank report, paying interest for the budget debt alone already cost us 7% of budget spending. If our GDP grows by 6% and inflation is 1%, that means that our growth will be cancelled out.
Oil prices have also fallen to 63 USD/barrel, compared to the predicted 100 USD/barrel at the beginning of the year. And oil revenues normally account for about 10% of budgetrevenue, but currently this contribution only at stands at 5-7%.
“Oil is an important factor in Vietnam’s budget revenue. However, according to the current low oil price, Vietnam can’t overly rely on this source. Budget revenue is also affected heavily when Vietnam reduces its tariff barriers for the free trade agreements that it has or will join”, said Vice Chief Representative, JICA Vietnam.
According to economists, to balance the national budget while budget revenue can’t increase, Vietnam needs more aggressive measures to control its budget spending.
