The latest data from the General Statistics Office (GSO) reveals that State budget revenue for this year as at July 15 stood at VND584.6 trillion ($25.7 billion), equal to 48.2 per cent of the annual plan.

Of the VND462.6 trillion ($20.35 billion) in domestic contributions, collections from crude oil totaled VND24.6 trillion ($1.08 billion) while import-export activities generated VND96.1 trillion ($4.23 billion). Environmental tax contributed some VND20.4 trillion ($897.6 million), while personal income tax payments brought in VND43.8 trillion ($1.93 billion).

Contributions from both the foreign direct investment (FDI) sector and the State-owned enterprise (SOE) sector were lower than expected, at VND84.2 trillion ($3.7 billion) and VND95 trillion ($4.18 billion), respectively.

State spending, meanwhile, was estimated at VND646.4 trillion ($28.44 billion) in the period, equal to 46.5 per cent of the annual plan, with regular expenditure and spending on interest payments at VND474 trillion ($20.85 billion) and VND60.1 trillion ($2.64 billion), respectively.

Spending on investment and development was VND110.4 trillion ($4.85 billion), or 30.9 per cent of the annual plan, while spending on debt repayments was coincidentally the same, at VND110.4 trillion ($4.85 billion), or 53.8 per cent of the annual plan. The government has put aside approximately VND170.5 trillion ($7.5 billion) on repaying debts and interest payments to date.

The State budget deficit as at July 15 was therefore VND61.8 trillion ($2.72 billion); the lowest in many years and significantly lower than the VND78.5 trillion ($3.45 billion) recorded in the same period last year.

But while this can be viewed as a positive, the rather low spending on investment and development is considered worrisome for overall growth momentum during the years to come, according to local economic experts.

Earlier, Prime Minister Nguyen Xuan Phuc approved the medium-term debt management program for 2016-2018, with public debt, comprising central government debt, government-backed loans, and local government debt, to be kept at less than 65 per cent of GDP during the two-year period.

It set a ceiling on outstanding central government debt of 54 per cent of GDP and 50 per cent for foreign debt. Domestic and foreign loans taken to cover State budget overspending, which made up 5.4 per cent of GDP in 2016, are expected to decline. 

This includes about VND247.2 trillion ($10.88 billion) in 2016, VND172.3 trillion ($7.59 billion) in 2017, and VND186.9 trillion ($8.22 billion) in 2018. Central budget overspending is targeted at 3.38 per cent of GDP in 2017 and 3.3 per cent in 2018.

Under the newly-approved plan, the central government will not provide guarantees for new domestic and external loans. The list of programs and projects set to receive government guarantees will be reviewed to calculate exact levels.

Meanwhile, the cap on local budget overspending is set at some VND6 trillion ($264 million) in 2017 and VND11.1 trillion ($488.51 million) in 2018, in accordance with the 2015 Law on the State Budget.

For 2017, the budget deficit ceiling has been set at 3.5 per cent of GDP, equal to VND178.3 billion ($8 billion). Total budget collections are to be VND1,212 trillion ($54.2 billion) and total budget expenditure VND1,390 trillion ($62.2 billion). The deficit target is quite low, as in recent years the 5 per cent GDP ceiling has been retained but the actual results in 2014 and 2015 were 6.33 per cent and 6.11 per cent, respectively.

Total State budget loans, including loans to cover the budget deficit and loan repayments, are to be VND340 trillion ($15.2 billion) this year.

VN Economic Times