Hung made the comment after the price on the May futures contract for West Texas Intermediate (WTI), also known as Texas light sweet, on New York’s Nymex on April 21 fell into negative territory -- minus 37.63 USD a barrel.
“The sharp decline will certainly reduce State budget revenue as the 2020 State budget estimate is based on an estimated oil price of about 60 USD per barrel,” he said.
“However, its impact will not be too big,” he noted, explaining that in recent years, there has been a change in the revenue structure, with revenue from crude oil currently accounting for less than 3 percent of the total.
According to Hung, the proportion of revenue from crude oil in the total budget revenue sharply fell from 13 percent in the 2011-2015 period to 4 percent in 2016 - 2018, and 3.2 percent in 2019.
In 2020, revenue from crude oil is estimated at 35.2 trillion VND (1.5 billion USD), making up only 2.3 percent of the total State budget revenue and representing a drop of 11.6 trillion VND compared to the previous year, with domestic output expected to reach 9.02 million tonnes.
Data from the Ministry of Finance shows that in the first quarter of 2020, budget revenue from crude oil approximated 14.6 trillion VND (622 million USD), equivalent to 41.4 percent of the estimate and up 7.3 percent year on year. Crude oil prices in the world market have plunged recently, but due to the delay in payment, the average price of oil from Vietnam from the beginning of the year to the end of March remained at 65 USD per barrel, 5 USD per barrel higher than the estimated price.
Meanwhile, the country’s oil output was estimated at 2.8 million tonnes in the period, equal to 26.8 percent of the plan.
Hung also said that Vietnam sees oil exports less than imports so its economy will benefit from low oil prices which help ease difficulties for production enterprises, thereby improving domestic budget revenue.
According to the General Department of Customs, in the first quarter of 2020, Vietnam’s crude oil exports were estimated at 1.2 million tonnes, worth 532 million USD, up 11.6 percent in volume but down 8 percent in value over the same period last year.
Meanwhile, the country spent over 1 billion USD importing 1.85 million tonnes of petroleum of all kinds, down 17.6 percent in value and 10.8 percent in volume year on year./.
Coronavirus downturn has put major pressure on oil prices with demand slumping and storage running out.
The Ministry of Finance will focus on improving the business climate and creating favourable conditions for businesses to accelerate growth, which is important to ensure State budget revenue amid the COVID-19 pandemic.