Vietnam’s budget revenue may fall next year if oil prices continue to decrease
Vietnam’s budget revenue may fall next year if oil prices continue to decrease
Balancing the budget in the context of continuing drop in world oil prices is one of the important issues discussed by the government at a cabinet meeting on December 1.
The government said the world and regional economic situation continued to be complicated, with many impacts on Vietnam. Particularly, the world oil prices dropped from $105 per barrel at the end of July to $68.53 in late November, the lowest in four to five years.
This movement is considered a direct impact on revenues and exports of Vietnam. To limit the impact, at the meeting, Prime Minister Nguyen Tan Dung asked the Ministry of Finance to review sources of revenues to ensure that the budget would not be in deficit.
In the press conference the same day, Chair of the Government Office – Mr. Nguyen Van Nen - said the 2015 budget estimation was built on the basis of the predicted oil price at $100 a barrel. If the price falls to $1/barrel, the budget revenue would drop about VND1 trillion ($47.6 million).
"Experts predicted that the oil prices could rise again in mid-2015, but it is just a forecast. If the price declines to $85/barrel, the budget will lose about VND20 trillion (nearly $100 million)," Nen said.
Nen said the Ministry of Finance was considering plans for dealing with this problem, including the exploitation of oil fields with low cost.
"The plans for additional sources of revenue have been prepared and we can feel secure because the Ministry of Finance’s plan is feasible," he added.
Earlier, an official from the Ministry of Finance told an online newspaper that the fall of oil prices has not had an immediate impact on budget revenues in 2014 because the oil price began falling in November and the average price for the past 11 months was still $109 per barrel.
He also said that a similar situation occurred in the past and the Ministry of Finance dealt with it well by raising import and export duties and other measures.
According to the Resolution on Budget 2015 passed by the National Assembly on November 10, the budget revenue for 2015 will be VND921.1 trillion ($43.86 billion) and the budget overspending will be VND226 trillion ($$10.76 billion), equivalent to 5% of GDP. The estimation was made based on the crude oil price of $100 per barrel.
The Chairman of the National Assembly Budget and Finance Committee - Phung Quoc Hien – said that major financial institutions in the world have forecasted that crude oil prices in 2015 will be around $85-$90 dollars a barrel. Accordingly, the expected budget revenue will fall VND10 to VND14.5 trillion compared to the estimations.
