BizLIVE - Vietnam will need some $90 billion to finance public investment projects in the upcoming five years in the context of tightened budget spending.
Vietnam Needs Nearly $90 Billion for Public Investment by 2020
Vietnam has huge needs for investment in infrastructure. Photo:
Vietnam is in need of up to 2,000 trillion dong (roughly $90 billion) to finance public investment projects in the 2016-2020 period, according to a government plan.
Deputy Prime Minister Vuong Dinh Hue, who was once minister of finance, has asked the Ministries of Planning and Investment and Finance to prioritize funding for crucial projects such as the North – South expressway, a coastal road, a border-patrolling road, and national target programs.
Hue also ordered the two ministries to draw up a plan on allocating some 10 trillion dong ($448 million) worth of proceeds, gained from selling state holdings in enterprises in 2015, to investment projects that will be carried out in 2017.
Over the past few years, the share of investment as per state budget spending has shrunk due to swelling regular expenditures and debt repayment. The ratio of regular spending, which is used to keep the administrative apparatus running, has jumped to over 70% of total budget spending.
Data of the General Statistics Office showed that regular spending reached 574.2 trillion dong ($25.7 billion) in the year to September 15, accounting for 70.1% of total spending. Meanwhile, debt repayments totaled $4.92 billion.
Disbursements of state capital for infrastructure projects met just 51% of this year’s plan while only 40% of government bonds have been disbursed since the beginning of this year.
With a slower-than-expected economic growth in the nine months ending September, the government is likely to miss the whole-year growth target of 6.7%.
Therefore, fiscal deficit will likely breach the 4.95%-of-GDP target set for the year and public debt may surpass the mandated safety threshold of 65%-of-GDP.