Government proposes budget deficit rise

Overspending will be reduced gradually as of 2015, Prime Minister Nguyen Tan Dung said while delivering a Government report at the current National Assembly session in Hanoi on October 21.

An increase in budget deficit will ensure total investment capital from the State budget and government bond sales for 2014 is not lower than in 2013, in order to accelerate economic restructuring, realise the three ‘strategic breakthroughs’, and stimulate growth, Dung said.

PM Nguyen Tan Dung says the Government will use budget more effectively in 2014

The Party has identified three ‘strategic breakthroughs’ for Vietnam, including finalising the socialist-oriented market economy institution, rapidly developing human resources, and building a synchronous infrastructure system.  

The PM said the government will issue additional bonds and keep a tight grip on public, government, and foreign debts within safety limit.

It will also use dividends from equitised companies that have not been transferred to the State Capital Investment Corporation (SCIC) to support infrastructure investment projects in 2013-14.

11/15 key targets fulfilled  

In the report, PM Dung said the government has made a great effort to meet and/or surpass 11 out of 15 key socio-economic development targets for 2013.

The national gross domestic product (GDP) is forecast to grow by 5.4% by the year’s end compared to the set target of 5.5%. The nation has created approximately 1.54 million jobs, 60,000 less than planned.

The budget deficit to GDP ratio (5.3%) and social development investment to GDP ratio (29.1%) also failed to meet the set targets (4.8% and 30% respectively).

On a high note, export earnings are expected to post a year-on-year increase of 14.4% (against the 10% plan), and the import surplus to total trade ratio is forecast at 0.4%, far below the 8% set level.

The consumer price index is estimated at around 7%, 1% less than planned.

Macroeconomic stability a priority

In 2014, Dung said the primary task is enhancing macroeconomic stability and controlling inflation. The government will continue with flexible monetary and tight fiscal policies, manage interest rates in line with the inflation control goal, and increase the credit growth.

The PM assured the NA that the government will use appropriate tools to effectively manage the foreign exchange and gold market to sustain the value of the domestic currency (Vietnam Dong).

The government will increase the efficiency of investment from the State budget and government bonds, formulate a public investment law for submission to the National Assembly, and complete key projects as scheduled.

It will speed up economic restructuring closely linked to growth renewal in all economic sectors, especially at economic groups and big corporations, aiming to improve the quality, efficiency and competitive capacity of the economy for 2013-2020.

It will get tough on divestment from non-core businesses and accelerate the equitisation of State-owned enterprises (SOEs).  

Another important task is simplifying administrative procedures, especially concerning taxation, customs, land, and business formation and dissolution, to facilitate business operations and reduce production costs.

The government will support small and medium-sized enterprises (SME) in accessing bank loans, increase the effectiveness of their credit, strengthen credit guarantee for SMEs and put into operation an SME development fund.