Government adopts action plan to restructure budget and manage public debt

08:52 | 26/06/2017 Finance - Banking

The government has issued an action plan on measures to restructure the State budget and manage public debt in an effort to keep spending deficit in check and guarantee national financial security.

Under the program, the government aims to gradually reduce budget deficit to 3.5% of gross domestic product (GDP) or lower by 2020.

Vietnam’s budget deficit in the last four years has continuously exceeded 5% of GDP, specifically 5.4% in 2012, 6.6% in 2013, 5.64% in 2014 and 6.11% in 2015.

During the 2016-2020 period, the government aims for the ratio of public debt to be at 65% of GDP or lower, of which government debt will not exceed 55% of GDP and national foreign debt 50% of GDP.

The government also aims to keep the ratio of regular spending under 64% while spending on development investment will account for about 25-26% of total expenditure.

Regarding sources of income, domestic tax revenues will make up about 84-85% while the ratio of revenues from crude oil and export-import activities will decrease to about 14-16% of total revenue.

In order to achieve the above-mentioned goals, the government has outlined a number of measures including implementing economic reforms aligned with enhancing the productivity and competitiveness of the Vietnamese economy.

The government will also take action to enforce budgetary discipline and step up the management of public debt, in which government budget will not be used to restructure State-owned enterprises or tackle bad debt at State-owned commercial banks.

In addition, new loans will only be approved once their impact on Vietnam’s public debt size and ability to cover debt repayment is fully assessed.

Theo NDO