Macro-economic situation facing unstable factors

Vietnam’s real budget deficit in 2011, prolonged trade deficit and macro-economic risks are of grave concern to National Assembly deputies.

Deputy Le Quoc Dung from the northern province of Thai Binh said at the on-going NA session that Vietnam’s real budget deficit in 2011 will double the reported value if unreported spending is added to the total sum.

Dung specified that next year’s budget deficit will account for up to 10.5% of the national GDP against the government’s set goal of 5.5% if the off-balance spending of VND82.5 trillion (USD4.12 billion) is counted, including an official development assistance (ODA) of USD3.2 billion and government bonds worth VND45 trillion (USD2.25 billion).

Therefore, the country’s real budget deficit will be much higher than the reported figure, which may cause a higher inflation rate, not just 7% as planned, the deputy added.

“Why are off-balance expenditures included in the national public debt, but not in the budget deficit? We think that this does not reflect the real situation accurately. We have just criticised Vinashin for its wrongful business reports. The NA also did not provide accurate reports on the group, despite supervising them. In 2008, the shipbuilder reported profits of VND605 billion (USD30.25 million) in spite of huge losses. It continued reporting profits in 2009,” Dung noted.

He called on the government to add all items of expenditures into the state budget for control to have an exact figure of the budget deficit, adding that “problems cannot be solved if we don’t look straight into the real issues.”

Weaknesses remain over past five years

Vu Viet Ngoan, Deputy Chairman of the National Assembly’s Economic Committee, said the Vietnamese macro-economic situation is facing potential unstable factors with higher risks and bigger challenges. The current foreign currency supply and demand as well as exchange rate pressure is a matter of concern, according to Ngoan.

Deputy Dang Nhu Loi

Prolonged and high trade deficit has hurt the balance of payment for over the past two years. If the situation is not improved, the country’s foreign currency balance will face difficulties.

“Therefore, it is too late for the government to aim to lower the trade deficit and export revenue ratio to 15% by 2015. The trade gap should be narrowed earlier to stabilise the exchange rate,” Ngoan said.

Dang Nhu Loi, Deputy Head of the Vietnam National Assembly’s Committee for Social Affairs, pointed out that socio-economic weakness of the 2006-2009 period have still remained to date.

Issues related to economic growth quality, economic structure transition, macro-economic balance, squandering human resource management and use, weak infrastructure, corruption and education, Loi specified.

He emphasised that, “For five years, these limitations have not yet been tackled. I feel that state agencies have dealt with these for on paper only.” Loi also mentioned inappropriate cadre placement in state management agencies as an issue.

The ineffective spending situation has still happened although it tops many agendas. It is said that spending for festivals is costly, but more events of its kind are still being held.- Dtinews

Tags: Vietnam economic, Vietnam economic growth, Vietnam economy