Vietnam to push back, scale down wage raise to save budget

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The basic salary in Vietnam will be increased by VND100,000 in July next year

Vietnamese legislators have approved a government plan to delay the annual salary raise for next year by two months and scale down the increase in an effort to avoid straining an already stretched state budget.

The basic salary, which is used to calculate the actual income for state employees and retirees, will be increased by VND100,000 (US$4.8) beginning July 2013, news website VnExpress reported Saturday, citing a budget plan for next year passed by 90 percent of the National Assembly the same day.

The salary was originally set to rise 23 percent to VND1.3 million in May, from the current VND1.05 million. The government said that would require a spending of some VND60 trillion ($2.9 billion) from the state budget next year, which it described as a very tough ask.

There was a time the government even proposed no salary increase at all for next year.

However, amid strong criticism from legislators and state employees, it suggested a smaller increase and a two-month delay to slash the extra spending estimate to VND20.7 trillion, or a 65 percent cut from the original plan.

Around 8.3 million people in Vietnam will receive the raise.

The newly approved budget spending plan also requires government agencies to tighten spending on ceremonies, new cars and overseas trips.

Legislators have asked the government to keep its budget deficit at VND162 triillion ($7.84 billion) next year, or 4.8 percent of the country's gross domestic product.

Even if the government can collect more revenues than the target of VND816 trillion, it should use the extra money to narrow the budget shortfall instead of increasing spending, they said.

Under the budget plan, the government is allowed to issue up to VND60 trillion ($2.9 billion) worth of bonds next year to fund state projects.

Vietnamese legislators have recently criticized the government for lax fiscal discipline after the budget deficit in the first ten months exceeded the annual target for 2012.

The deficit, as of mid-October, was estimated at VND155 trillion ($7.4 billion) by the General Statistics Office. That is 10.7 percent higher than the target for the whole year approved by the National Assembly.

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