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Home / Economy / Banking & Finance
Government to let foreign currency reserves fund development
09:30, 2015/05/06
The Government, for the first time, has instructed relevant ministries to create a legal mechanism to allow for part of foreign currency reserves to be used to fund development projects.
At the Government's regular meeting in April, the State Bank of Vietnam, in conjunction with the ministries of Finance, and Planning and Investment, were directed to research and propose the mechanism, in which the loans will be made available for development projects to help secure the nation's financial security.
Statistics from the central bank showed that Vietnam's foreign currency reserves have steadily increased in recent years, reaching roughly US$35 billion, as of the end of last year.
According to the Ministry of Finance, State budget revenues in the first four months of the year grew 9.4% against the same period last year, totaling VND314.1 trillion (US$14.54 billion), and fulfilled 34.5% of the full-year plan.
However, the country's total budget spending in the period also rose 9.5% year-on-year to VND362.7 trillion (US$16.79 billion), of which spending for debt payment was VND52.7 trillion (US$2.43 billion), while spending for development projects was VND250.7 trillion (US$11.6 billion).
Also, experts were concerned about collecting budget revenues this year due to the fall in crude oil prices. Revenues from crude oil during the first four months of the year dropped nearly 33% against the same period last year, to VND23 trillion (US$1.06 billion).
Photo for illustration
Photo for illustration
The issue of selling G-bonds to create capital for State budgets has also faced difficulties, as demand by banks for the bonds has declined. The Government plans to raise VND250 trillion (US$11.57 billion) from selling G-bonds in 2015, though only VND56 trillion (US$2.59 billion) in bonds were bought in the first quarter.
During the regular press meeting in early April, the Ministry of Finance also warned that the State budget could be short VND32 trillion (US$1.48 billion) this year to spend on development investment and debt payments.
The ministry recommended that the Government take measures to save 10% of planned recurrent expenditures from now through the end of the year, besides issuing long-term international bonds to restructure domestic short-term loans.
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