HANOI, March 26 (Xinhua) -- The state budget deficit, which regularly remains at a high level, and rising public debt are among the biggest macro-economic risks faced by Vietnam, daily newspaper Vietnam News on Tuesday quoted local economists and scholars as saying.
Vietnam's public spending over the past 10 years has remained high, while state budget collection is unable to cover the spending, with the budget deficit being the highest in the region, said Tran Tho Dat, a member of the Vietnamese prime minister's economic advisory team, and principal of the country's National Economics University.
According to Dat, Vietnam has no other choice but to continue borrowing to compensate for the overspending, causing public debt to rise. "This has affected long-term economic growth, macro-economic stability and Vietnam's capacity to respond to changes in the economic sector," he said.
According to Associate Prof. To Trung Thanh from the university, Vietnam is vulnerable to external pressures. Escalating global trade conflicts are forecast to lead to declining demand for exports and decreasing foreign investment to the country.
Domestic factors also impact national economic growth. The slow restructuring of state-owned enterprises and the banking sector is predicted to place a greater burden on the public sector, Thanh said.
Senior economist Vo Tri Thanh said that Vietnam's economic growth depends on multi-national corporations, and that the country will be affected if these groups face challenges.
Economists and scholars said Vietnam needs to reform its tax collection system to reduce the burden and cut spending on administrative management. Financial allocation and management tasks should be assigned to local authorities and they must uphold their responsibility of ensuring transparency.
According to the Vietnamese Ministry of Finance, state budget overspending in 2019 should be capped at 3.6 percent of the gross domestic product (GDP).
Vietnam achieved GDP growth of 7.08 percent last year, the highest rate over the past 10 years, up from the annualized target of 6.5 percent to 6.7 percent, according to its General Statistics Office.
The country's top legislature has set a target of attaining GDP growth of 6.6 percent to 6.8 percent this year.