The Vietnamese government has spent nearly US$1 billion for disease control and disaster response, including VND17.9 trillion (US$774.7 million) to aid the Covid-19 fight and support people affected by the pandemic, according to the Ministry of Finance (MoF).

The government expects a fiscal deficit of VND343.67 trillion (US$14.82 billion) next year. Photo: Chien Cong.

The government also allocated VND4.54 trillion ($196.5 million) to help mitigate impacts from natural disasters, flooding and African swine fever, while nearly 32,950 tons of rice from national reserves were allocated to people in provinces and cities hit by natural disasters.

Under the severe covid-19 impacts, state budget revenue in the first 11 months of 2020 was estimated at VND1,260 trillion ($54.53 billion), or 83.4% of the estimate.

This budget revenue reflected difficulties of the business community and the impact of government’s supporting policies in forms of freezing and delaying in payment of taxes and fees, noted the MoF.

“Assuming Vietnam’s GDP growth to reach 2-3% for this year, failing to meet the target of 6.8%, state budget revenue is estimated to decrease by 12.5%, or VND190 trillion ($8.21 billion), compared to the estimate,” Minister of Finance Dinh Tien Dung stated.

“While there is a decline in state budget revenue, the government still has to increase spending on tackling problems caused by climate change and natural disasters, ensuring social welfare,” he added.

During the 11-month period, state budget expenditures totaled VND1,369.6 trillion ($59.23 billion), or 78.4% of the year's estimate. Of the sum, capital expenditure was equivalent to 71.4% of the estimate, higher than the disbursed amount of the same period last year, but lower than expected.

Given the current context, Minister Dung urged government agencies to tighten spending, including at least 70% cut in expenses for working trip abroad and 10% of regular spending.

“The government has been able to save VND17.4 trillion ($753.4 million) from trimming off unnecessary spendings,” Mr. Dung stated.

Vietnam’s budget deficit this year is estimated at VND319.5-328 trillion ($13.78-14.15 billion), equivalent to 4.99-5.59% of GDP, significantly higher than the 3.44%-of-GDP target set in early 2020.

For the next year, Vietnam’s state budget revenue is estimated at VND1,343 trillion ($58 billion) and expenditure of VND1,687 trillion ($72.78 billion), resulting in a fiscal deficit of VND343.67 trillion ($14.82 billion).

In 2021, Fitch Solutions, a subsidiary of Fitch Group, forecast Vietnam's expenditures to grow by 16.6% as a rebound of economic activity as well as government efforts to expedite public capital expenditure should drive rapid growth in expenditures. This would result in a fiscal deficit of 3.6% of the GDP (excluding debt payment).