Vietnam fiscal deficit widens to US$4.57 billion in 8 months on Covid-19

Vietnam recorded a state budget deficit of VND106 trillion (US$4.57 billion) in the year to August 15, further widening from a deficit of VND101.1 trillion (US$4.37 billion) recorded a month earlier, according to the General Statistics Office (GSO). 

Data: GSO. Chart: Ngoc Mai.

The wider deficit was due to the Covid-19 resurgence in Danang late July, which later spread to other localities and affected the resumption of economic activities, stated the GSO.

As of August 15, budget revenue collection reached VND812.2 trillion (US$35.04 billion), equivalent to 53.7% of the year's estimate.  

Upon breaking down, domestic revenue during the period stood at VND674.4 trillion (US$29.1 billion), equivalent to 53.3% of the year's estimate. Of the sum, the state sector contributed VND80.5 trillion (US$3.47 billion), or 45.3% of the year's estimate, the FDI sector grossed VND114.3 trillion (US$4.93 billion), meeting 50% of the plan. 

Moreover, VND118.9 trillion (US$5.13 billion) was collected from non-state industrial, commercial and service taxes, equaling 43.9% of the plan, and VND35.1 trillion (US$1.51 billion) from tax on environmental protection or 52% of the plan. Personal income tax contributed VND77.1 trillion (US$3.32 billion) to the state budget or 59.9% of the year's estimate, and revenue through the granting of land-use right totaled VND83.3 trillion (US$3.6 billion), or 86.8% of the plan.

Revenue from import-export activities hit VND112.8 trillion (US$4.86 billion), or 54.2% of the year's estimate, and that from crude oil totaled VND24.2 trillion (US$1.04 billion), meeting 68.8% of the year's plan.

Data: GSO. Chart: Ngoc Mai.

Meanwhile, state budget expenditures as of August 15 totaled VND918.2 (US$39.62 billion), equivalent to 52.6% of the year's plan. Of the total, regular spending reached VND633.2 trillion (US$27.32 billion) or 59.9% of the plan. Capital expenditure reached VND208.7 trillion (US$9 billion) or 44.3%, and interest payment, VND70.4 trillion (US$3.03 billion) or 59.6%.

Fitch Solutions, a subsidiary of Fitch Group, has revised its forecast for Vietnam’s fiscal deficit (excluding debt principal repayments) to be 6.4% of GDP in 2020 (from 6.0% of GDP previously), almost double of 3.4% in 2019.

Such a deficit forecast is larger than the Ministry of Finance's 5.0-5.1% deficit estimate, which already reflects the authorities’ view for a wider deficit versus their initial 3.4% target set for 2020 back in December 2019.