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Authorities mitigate impact of falling oil price to State budget

Update: December, 17/2014 - 08:58
Some experts are concerned about the reduction of the state's budget next year as the export value of crude oil, which has fallen by 30 per cent to a four-year low of roughly $60 per barrel, contributes significantly to the nation's coffer. — VNA/VNS Photo Danh Lam
HA NOI (VNS) — The government will implement comprehensive measures to meet next year's annual state budget collection target of VND911.1 trillion (US$42.774 billion), notwithstanding the insignificant effect of the global oil price decline.

Some experts are concerned about the reduction of the state's budget next year as the export value of crude oil, which has fallen by 30 per cent to a four-year low of roughly $60 per barrel, contributes significantly to the nation's coffer.

However, Deputy Finance Minister Do Hoang Anh Tuan said that as of 2014, the state coffer has not been heavily dependent on the fluctuation of the world's oil price due to a shift in the state's budget collection sources.

Tuan explained that the oil export revenue is estimated to account for only approximately 10.2 per cent of the total state budget in 2014 compared with the previous 20–25 per cent rate.

State budget collection from domestic production makes up more than 70 per cent of the total budget, which diminishes the gravity of the impact of oil export collection.

Dr. Tran Hoang Ngan, a member of the National Assembly's Economic Committee, also expressed continued optimism despite the predicted oil price fluctuations, saying that the gains will be larger than the losses.

Viet Nam has to spend more on importing petroleum products compared with its earnings from exporting crude oil.

Therefore, an ongoing decline in oil prices will result in lower prices of petroleum products. In turn, this will help enterprises cut back on their production costs.

Hence, enterprises can expect higher profits, which will consequently add to their taxes to be paid to the state coffer. Ultimately, this will help increase the state's revenue.

Finance Minister Dinh Tien Dung also said that the ministry will focus on eliminating obstacles and creating favourable conditions for firms to assist them in boosting production and business.

The measure will create a long-term collection source for the state budget, Dung said. He also explained that the firms will only be able to meet their tax obligations when their businesses and production performances are good.

Moreover, the finance ministry has worked closely with other relevant departments and agencies to employ relevant measures to guarantee the achievement of the state budget collection target, Dung said.

One of the measures is to increase the collection of tax arrears, which has reached more than VND60 trillion ($2.816 billion) thus far.

To increase the state budget collection next year, experts also recommended that the government should effectively manage state budget collection and reduce spending, including administrative and regular expenditure as well as public debt payment.

Strict punishment should be meted out against those responsible for improper, wasteful and ineffective expenditures, the experts asserted. — VNS

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