Budget deficit higher than expected

The State budget deficit was estimated to hit VND92.39 trillion (US$4.35 billion) in the first half of this year, equal to 57 percent of the annual plan set by the National Assembly.

Addressing the July 19 conference in Hanoi, which reviewed the Ministry of Finance (MoF)'s performance in the first half and plan for the remaining months, head of MoF's Administrative Office Nguyen Duc Chi reported that the country's total budget collection in the first half reached VND356.52 trillion (US$16.58 billion).

The sum, he said, was an equivalent to a 4.5 percent rise against the same period last year, meeting 43.7 percent of the annual target. 

He also reported that domestic revenues only met 43.3 percent of the yearly target - the lowest level seen at this stage in the past four years. 

The country's total expenditure in the period surged 7.5 percent from last year, reaching VND448.91 trillion (US$20.88 billion) and meeting 45.9 percent of the annual target. 

Of this amount, spending for socio-economic development and administrative management rose 11.6 percent against the same period last year, while payment for foreign aid was up 2.8 percent year-on-year. 

The ministry estimated that this year's State budget collection would be cut by VND17.613 trillion (US$819.2 million) due to tax exemptions and extensions. 

To support businesses throughout the economic slowdown, the finance ministry has extended and reduced corporate income tax (CIT), value added tax (VAT), environmental protection tax and land lease fees for a number of firms. 

Chi said that the Government's measures to support production and business had allowed more than 40,520 new firms to be set up in the first half of the year, raising the number of firms in the country to 457,343, up 9.5 percent over the same period last year. Among the newly-established firms, 249 were State-owned firms, 542 foreign invested firms and 39,732 private firms. 

He said this is a good signal in the context of the economic slowdown, adding that the number of firms ceasing operation during the first half of the year was 24,931, of which 202 were State-owned and 269 were foreign invested. 

For the second half of the year, Chi said that the finance ministry would continue to coordinate with other relevant ministries and agencies to study and map out suitable tax policies to help boost production and increase the competitiveness of firms and their products. 

"Together with better controlling to avoid tax fraud, the Ministry of Finance will focus on removing difficulties for businesses, helping them deal with inventories and non-performing loans, enlarging markets and increase production and business," he said. 

The ministry will also quickly finalise this year's expenditure plan on infrastructure construction, investment capital and Government bond capital to bolster consumption, helping producers remove inventories.

VNA/VOV online