Vietnam’s spending deficit in 2016 will hit 5.52% of gross domestic product (GDP), higher than the initial target of 4.95% because nominal GDP is smaller than expected, according to projections by the National Financial Supervisory Commission (NFSC).
The financial regulator also predicted that public debt would rise from 62.2% of GDP last year to 64.98% in 2016, close to the 65% threshold allowed by the National Assembly.
But the debt structure is improving, with the ratio of domestic debt growing from 40.3% of Government debt in 2010 to 57% in 2016 and that of foreign debt shrinking.
The terms of Government bonds have also increased from an average of 4.8 years during the 2011-2015 period to 8.7 years in 2016 and bond yields have dropped from an average of 7.6% during the 2011-2015 period to 6.5% in 2016.
According to the NFSC, Vietnam’s inflation continued to go up but core inflation, which excludes food, energy and Government-regulated goods, remained stable at below 2%, indicating that the pressure of demand on inflation was insignificant.
Inflation this year is predicted to be 5%, higher than in 2015, mainly because of price hikes in healthcare and education services.
Factory output has continued improving towards the end of the year with the purchasing managers’ index in October reading 51.7, meaning an expansion in the manufacturing sector.
The index of industrial production in October rose about 6% from a month earlier thanks to a 6% recovery in the mining sector and solid growth in manufacturing.
In the first ten months of 2016, Vietnam posted a surplus of US$3.52 billion thanks to strong export growth at 7.2% and modest import growth at 2.1%.
The figures for exports and imports during the same period of last year were 8.8% and 14.3% respectively.
Foreign enterprises have remained the key driver of export growth, accounting for nearly two thirds of Vietnam’s total export revenues and registering a surplus of US$17.6 billion.
The foreign sector’s growth is expected to further accelerate in the near future as a result of a strong investment inflow.
Total foreign direct investment pledges in the first eleven months of 2016 had increased by an estimated 8.3% compared to a year earlier to more than US$18.1 billion, of which nearly 80% has been disbursed.
Source: Nhan Dan
Key words: fiscal deficit, in 2016, projected, to exceed target, financial regulator
