Vietnam’s economic performance has showed positive signs with last year’s GDP growth rate at 7.08 per cent, the highest rate in the last ten years. (Photo: vneconomy.vn)Hanoi (VNS/VNA) - The state budgetdeficit, which regularly remains at a high level, and rising public debt areamong the biggest macro-economic risks facing Vietnam, making it more difficultfor the government to help the economy head towards growth, said Professor TranTho Dat, Principal of the National Economics University (NEU).
Dat, who is a member of the Prime Minister’seconomic advisory team, made the statement on March 25 at the nationalscientific conference on Vietnam’s economy in 2018 and prospects for this year.
Participating specialists and scientists assessedVietnam’s economic performance, pointed out shortcomings, analysedopportunities and made financial policy recommendations to ensure the safetyand sustainability of nation’s finances.
According to Professor Dat, Vietnam’s economicperformance has showed positive signs with last year’s GDP growth rate at 7.08percent, the highest rate in the last ten years. The primary contributions togrowth come from foreign direct investment, the processing and manufacturingindustry, domestic consumption and a trade surplus.
However, efforts to improve the business climatehave recently slowed. Other challenges come from difficulties encountered bythe private sector and greater fiscal risks.
Vietnam’s public spending over the past ten yearshas remained high while State budget collection is unable to cover thespending. Vietnam’s State budget deficit is the highest in the region. Thecountry has no other choice but to continue borrowing to compensate for the overspending,causing public debt to rise, he said.
“This has affected long-term economic growth,macro-economic stability and Vietnam’s capacity to respond to changes in theeconomic sector,” Dat said.
Associate Professor To Trung Thanh from NEU saidVietnam is vulnerable to external pressures. Escalating global trade conflictsare forecast to lead to declining demand for exports and decreasing foreigninvestment to the country.
Domestic factors also impact national economicgrowth. The slow restructuring of State-owned enterprises and the bankingsector is predicted to place a greater burden on the public sector, he said.
Senior economist Vo Tri Thanh said economic growthdepends on multi-national corporations. Vietnam will be affected if thesegroups face challenges, making it the biggest difficulty the country currentlyfaces.
Participants at the conference agreed that it wasnecessary for Vietnam to assess fiscal policy in the context of new economicdevelopments and analyse the impacts of fiscal policy on the economy.
Vietnam needs to reform its tax collection systemto reduce the burden and cut spending on administrative management.
Financial allocation and management tasks shouldbe assigned to local authorities and they must uphold their responsibility ofensuring transparency, the conference was told.-VNS/VNA
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