Vietnam targets an average fiscal deficit of 3.7% in the next five years period, being around 4% of the GDP in 2021 before declining to 3.4% by 2025, according to Minister of Finance Dinh Tien Dung.

Minister of Finance Dinh Tien Dung at the hearing session. Photo: Nhat Bac.

By 2025, Vietnam’s public debt is estimated at 47.5% of the revised GDP (which is 25.4% higher than current method of GDP’s calculation), or 60.4% of the level being revised, stated Mr. Dung at a hearing session at the National Assembly on November 5.

For the 2021 – 2025 period and given the average GDP growth target of 6.5 – 7%, the government estimates total state budget revenue of VND7,800 trillion (US$336.93 billion), a 1.1 – 1.2-fold increase compared to the 2016 – 2020 period. Of the total, the contribution of taxes and fees revenues would be around 13 and 14% of GDP, while it made up 24.5% and 20.4% of the GDP in the 2016-2020 due to the enlargement of the Vietnamese economy after the GDP revision.

Meanwhile, revenue from land and import-export activities in the next five years would be around the level of the 2016 – 2020 period, while that of crude oil would be half of the previous five years and account for 3.3% of the adjusted GDP in the 2021 – 2025 period.

Overview of the hearing session at the National Assembly. Source: quochoi.vn.

Priority to ensure fair business environment

The finance minister informed that the structure of budget revenue continues to improve, in which domestic revenue accounts for 85 – 86% of total, import – export activities 12.7%, and crude oil 1.4%.

Mr. Dung said amid global uncertainty stemming from the Covid-19 pandemic and global trade tensions among major economies, the Ministry of Finance (MoF) still expects domestic revenue to expand by 8% annually in 2021 – 2025.

To achieve this target, the MoF would continue to improve the legal framework regarding state budget revenue collection, and push for reforms in the process, especially in restructuring sources of revenue in compliance with international practices.

The MoF gives priority to ensuring a fair and favorable business environment to promote business and investment activities, stated Mr. Dung.

Regarding state expenditure, Mr. Dung said the government expects to spend around VND9,700 trillion (US$419.34 billion), a 1.3-fold increase against the 2016 – 2020 period. Of this amount, capital expenditure is set at VND2,750 trillion (US$118.88 billion), or 27.28% of total expenditure.

Additionally, Mr. Dung said the government would continue to tighten regular spending while still ensuring sufficient allocation of funds for social beneficiaries, national security and essential public services.

For 2020, Vietnam’s budget deficit is estimated at VND319.5 – 328 trillion (US$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.

This year, Vietnam’s budget revenue is estimated at VND1,320 trillion (US$57 billion), down VND189.2 trillion (US$8.16 billion) or 12.5% compared to the year's estimate and 14% against the figure recorded in 2019.

Meanwhile, state budget spending could reach VND1,680 trillion (US$72.47 billion) this year, down VND60.89 trillion (US$2.62 billion) or 3.5% against the estimate.

For next year, Vietnam’s state budget revenue is estimated at VND1,343 trillion (US$58 billion) and expenditure of VND1,687 trillion (US$72.78 billion), resulting in a fiscal deficit of VND343.67 trillion (US$14.82 billion) for 2021.