The National Assembly Finance and Budget Commission has supported the government’s proposals to increase the budget deficit ceiling and issue more bonds, but urged it to tighten public spending.
Making its review of the government’s proposals at a house meeting Tuesday, the commission said it “basically” agreed with raising the deficit cap from the current 4.8 percent of GDP to 5.3 percent next year.
It also approved of the plan to issue bonds worth VND170 trillion (US$8 billion) in 2014-16 in addition to bonds worth VND75 trillion already approved by the NA for issue in 2011-15.
Phung Quoc Hien, the chairman of the commission, quoted the review as saying that for the first time in many years government revenues are set to miss the target this year.
This would greatly affect managing and balancing the budget and earmarking of funds for public spending, he said.
Minister of Finance Dinh Tien Dung reported at the session that the deficit is estimated to be around VND193 trillion ($9.1 billion) this year, or VND32 trillion ($1.5 billion) more than approved by the NA.
The higher deficit was caused by the lower than expected revenue, he said.
The Ministry of Finance expects the government 's revenues this year to be VND752 trillion ($35.6 billion), or 7.8 percent less than originally estimated.
Despite giving its consent to the government’s proposal and budget statement, the NA commission expressed concern.
Hien said though the government has guaranteed that despite the higher budget deficit cap and the issuance of new bonds, Vietnam’s public debt would not exceed the ceiling of 65 percent of GDP set by the NA for 2015, there would be increasing repayment pressure.
The public debt is estimated at 52.6 percent by this year end, according to the Ministry of Finance.
The government needs to draw up a detailed plan to repay debts and submit a “clear” report on the debts to the NA, Hien said.
Cao Si Kiem, a deputy from the northern province of Quang Binh and also chairman of the Vietnam Association of Small and Medium Enterprises, said the government sought to increase the budget deficit ceiling as a last resort.
But it needs to clarify where the money would go and how it would supervise the use of funds, otherwise lawmakers would not approve, he warned.
Expenses like officials’ meetings and foreign trips must “definitely” be curtailed, he said.
Tran Du Lich, a legislator from Ho Chi Minh City, agreed, saying he would support the government’s proposal as long as public spending is carefully managed.
In its review, the commission too has pointed out shortcomings in the government’s financial management.
Many projects are tardy and the money for them has not been allocated properly, while some agencies “lack determination” to cut public spending, Hien quoted the commission’s report as saying.
But in the meantime many policies have been announced, increasing public spending, but they are not in step with the availability of funds, it said.
Even in its spending estimates for next year, the government does not convey a “clear” message that it is tightening spending in “the current difficult situation,” it said.
The government plans to spend some VND1 trillion ($47.3 million) next year, a 2.9 percent rise from this year’s estimate.