Debt is not only a headache for the Government but also provinces and cities. A number of localities are found to owe huge sums and they have even run out of cash though the year 2015 is not yet out.

The southern city of Ca Mau is facing a debt of VND300 billion (USD14.2 million) and particularly can’t afford to pay the salaries of local state employees.

Ca Mau City has one of the highest economic growth rates in the Mekong Delta region with several major infrastructure projects. However, the city recently shocked the public with its budget report.

Ca Mau City

According to the report, in 2012, the city’s budget revenues reached VND494 billion (USD23.5 million), but sending was up VND555 billion. The city also saw a budget deficit of VND90 billion in 2013.

Huynh Thanh Dung, Vice Chairman of the municipal people’s committee, said that over the recent years, the city had failed to reach its budget revenue targets, leading to the budget deficit.

“Ca Mau has set a goal to become a centrally-controlled city by 2020 so we have been developing several major infrastructure projects. The province allocates an annual budget of VND40 billion for infrastructure development, which is not enough. Meanwhile, the failure to fulfill the budget revenue target has added to the city’s fiscal pressures,” Dung said.

The city owes debts to several contractors which have carried out local infrastructure projects. It also owes the provincial Social Insurance VND11 billion and has debts with some other local companies.

Nguyen Tan Van, Director of Ca Mau Urban Environment Ltd. Co., said that the city has not yet paid his company VND14 billion for urban hygiene, lighting and tree and park care.

Van said that his company will lack money to pay salaries next month if Cau Mau City fails to make their payment.

Bac Lieu City in the southern province of Bac Lieu is also in the same situation and has racked up tens of billions of VND in back payments to the provincial Social Insurance and local companies.

Undoubtedly, big provincial debt has been one of the reasons behind for an upsurge in Vietnam’s public debt in recent years. Government, government-guaranteed and provincial debt is projected to increase to 61.3% of gross domestic product this year from 51.7% in 2010, according to the Ministry of Finance.    

Nguyen Van Nen, Minister and Chairman of the Government Office, said the Government had told ministries, agencies and provincial authorities to cut all non-essential spending to deal with the chronic budget deficit.

In previous years when the economy was still in distress, ministries, agencies and localities were told to practice thrift but wastefulness remained. The debt burden would certainly become heavier if carefree spending is here to stay.  

Dtinews/SGT