Minister of Finance Dinh Tien Dung has voiced his concern over State budget revenue losses due to declining corporate health.

“It’s August already but there are still numerous concerns over State budget collection,” said Dung in an article authored by himself in Nhan Dan newspaper.

He said State budget collection as of end-July had reached more than VND429 trillion, or nearly 53% of the estimate, with domestic sources generating around VND282 trillion, lower than the figures recorded in the same period of previous years.

The finance minister ascribed difficult budget collections to the fact that businesses, the pillar of the economy, are still mired in troubles.

In the first half of the year, nearly 25,000 companies discontinued their operations, including 202 State-owned enterprises, 269 foreign-invested enterprises and 24,460 non-State enterprises.

Dung said: “As businesses are inactive, they no longer have tax obligations. Though the number of newly-established firms is roughly equal to the number of inactive ones, they obviously cannot perform as well as those with intensive experience. This leaves a direct impact on financial and budgetary targets for 2013.”

The article does not reveal total State budget spending in the first seven months of the year. However, a report by the finance ministry says budget spending in January-July is nearly VND528 trillion, or 54% of the estimate, up 7.3% year-on-year.

Thus, a budget deficit of nearly VND99 trillion was recorded in the first seven months, reaching 61% of the year’s estimate passed by the National Assembly (NA).

As per the report, the finance ministry by the end of July had raised VND127.33 trillion from government bond sales, meeting 65.3% of the goal of mobilizing capital from local sources to make up for State budget deficit in 2013.

Government bond sales have far exceeded the quota of VND60 trillion endorsed by the NA early this year. In the 2011-2015 period, the Government is allowed to issue a total of VND225 trillion worth of bonds.

Economist Nguyen Minh Phong told the Daily that it was necessary to issue government bonds in the context of difficult budget collection.

Totaling nearly VND100 trillion, State budget deficit in the first seven months almost equals a quarter of the total revenue of VND429 trillion in the same period last year, he said.

In addition, a State budget revenue loss of VND65 trillion projected by the finance minister at the Government meeting in June shows that State budget collection is very difficult this year. “The situation is very tough, so government bond issuance is a must,” Phong said.

‘The government bond issuance quota set by the NA is simply a quota. In fact, the NA wants the Government to fulfill its economic tasks. Without bond issuance, the Government would have no funds left to fulfill such tasks,” he said. He noted the NA had begun to talk about raising the public debt ceiling.

Expert Vu Dinh Anh, on the other hand, said the NA should have tightened controls on government bond issuance.

According to the Asian Development Bank, government bond sales in 2012 stood at 3.6% of the nation’s GDP, versus 1.2% in 2011.

The finance ministry expects to issue some VND170 trillion worth of government bonds this year.