Additionally, Vietnam’s average GDP growth rate in the 2020 – 2022 period is projected to reach 6.8%, stated the MoF in its latest report submitted to the National Assembly.
The forecast was based on the context of global economic uncertainties, in which protectionism and trade tension would continue to cause instability to the world’s business and investment environments as well as trade activities.
Additionally, geopolitical tensions, border conflicts, among other issues, are projected to have impacts on Vietnam’s economic growth.
According to the MoF, the 2020 – 2022 period is a transitional period from the five-year social-economic development plan and five-year national financial plan 2016 – 2020 to the ones of the 2021 – 2025 period.
The MoF targets state budget revenue during the period at VND4,900 trillion (US$210.62 billion), in which the average rate of capital mobilization is projected at 21 – 22% of the GDP and the rate of domestic revenue until 2022 is to account for 84 – 85% of GDP.
Meanwhile, Vietnam’s state budget expenditure in 2020 – 2022 is projected to hit VND5,700 trillion (US$244.98 billion), resulting in a fiscal deficit of 3.44% of GDP in 2020 and 3.5% in 2021 and 2022.
The MoF also highlighted major risks to Vietnam’s financial plans in the 2020 – 2022 period.
Firstly, Vietnam’s macro-economic conditions have been improving significantly with greater economic resilience, however, the development remains away from sustainability, due to the high level of economic openness; the structures of social investment capital and trade balance are highly dependent on foreign-invested sector, particularly in a period of global economic environment with strong volatility.
Secondly, the country faces huge challenges in maintaining high economic growth of over 6.8% annually. In addition to risks concerning FDI attraction and exports, unfavorable factors include natural disasters, and environmental pollution, among others.
The MoF suggested risks concerning economic growth would pose risks to state budget revenue, due to 70% of state budget revenue is from domestic tax collection and over 16% from trade tarrifs.
The MoF noted fiscal deficit could widen than the current estimate, due to risks in state budget revenue collection, natural disasters, epidemic, environmental pollution, among others.