The State Bank of Vietnam has decided to offer the Ministry of Finance a VND30 trillion (US$1.31 billion) loan as budget shortfalls have become an issue amid weak bond sales.
An employee counts Vietnamese dong banknotes for an arranged photograph inside a bank in Ho Chi Minh City. Photo: Bloomberg
Dao Xuan Tue, deputy chief of the Department of State Budget under the finance ministry, confirmed about the borrowing at the ministry's quarterly press conference on Friday, local media reported.
The shot-term loan is meant to help the ministry solve issues related to the state budget's liquidity, and it will be paid off by the end of the year, he said.
Vietnam's state revenues were estimated at VND683 trillion ($29.9 billion) in the January-September period, up 7 percent from the same period last year, the ministry reported.
The increase was partly due to higher tax collections. Earnings from crude oil exports dropped by nearly 35 percent after global oil prices plummeted, it noted.
On the other hand, expenditures almost hit VND824 trillion ($30.07 billion) at the end of September, nearly 14 percent of which was debt servicing expenses.
The government is having difficulties selling bonds.
At the end of September, it managed to mobilize nearly VND127.5 trillion ($5.58 billion) through bonds, most locally issued. That was equivalent to only 51 percent of the annual target and down 39 percent year-on-year.
The ministry said the recent devaluation of the Vietnam dong has discouraged debt investors.
When the finance ministry announced its plan to borrow from the central bank in July, it caused concerns among economists who said if the ministry fails to repay the loan, the whole economy will be affected.
They were also worried that the ministry was not clear about how it would spend the money.