Vietnam's state budget income dropped in the first six months of 2012, making it more difficult for the government to spur growth in an economy that has expanded at a pace of below 5 percent this year.
State budget revenue dropped 1.7 percent in the first half from the same period last year, to 346 trillion dong ($16.6 billion), equivalent to 46.7 percent of the target for the full year, according to a statement from the Ministry of Finance.
The economy expanded 4.66 percent in the three months to June from a year earlier, and the government faces a challenge in meeting its 6-percent target in 2012 amid a deepening debt crisis in Europe and a growth slowdown in China. State income for the first half fell as slower expansion hurt businesses, according to the ministry's statement today, even as the central bank cut interest rates this year.
"Drops in the state revenue will seriously affect the government's plan of speeding up spending to boost the economy toward the end of this year," said Le Dang Doanh, a former senior economist at the Ministry of Planning and Investment. "The government may have to sell more bonds to raise funds," said Doanh, who has advised Prime Minister Nguyen Tan Dung.
Vietnam sold VND79 trillion of government bonds in the first half, three and half times the amount it raised from bond sales in the same period last year, the State Securities Commission said on its website Thursday.
Bond sales have benefited after Vietnam's rating outlook was raised last month by Standard & Poor's. They have also increased due to a surplus of funds at banks as lending decreased, according to Hoang Thanh Tam, head of fixed-income at Vietnam Maritime Commercial Joint-Stock Bank in Hanoi.
"Banks haven't given as many loans as they wanted to because the current economic situation hurt businesses and trimmed demand for loans," Tam said before the finance ministry report.