05/05/2015 15:41 GMT+7 Email Print Like 0

Gov't to let foreign currency reserves fund development

Hanoi, May 5 (VNA) - The Government, for the first time, has instructed relevant ministries to create a legal mechanism to allow for part of foreign currency reserves to be used to fund development projects.

At the Government's regular meeting in April, the State Bank of Vietnam, in conjunction with the ministries of Finance, and Planning and Investment, were directed to research and propose the mechanism, in which the loans will be made available for development projects to help secure the nation's financial security.

Statistics from the central bank showed that Vietnam's foreign currency reserves have steadily increased in recent years, reaching roughly 35 billion USD, as of the end of last year.

According to the Ministry of Finance, State budget revenues in the first four months of the year grew 9.4 percent against the same period last year, totaling 314.1 trillion VND (14.54 billion USD), and fulfilled 34.5 percent of the full-year plan.

However, the country's total budget spending in the period also rose 9.5 percent year-on-year to 362.7 trillion VND (16.79 billion USD), of which spending for debt payment was 52.7 trillion VND (2.43 billion USD), while spending for development projects was 250.7 trillion VND (11.6 billion USD).

Also, experts were concerned about collecting budget revenues this year due to the fall in crude oil prices. Revenues from crude oil during the first four months of the year dropped nearly 33 percent against the same period last year, to 23 trillion VND (1.06 billion USD).

The issue of selling G-bonds to create capital for State budgets has also faced difficulties, as demand by banks for the bonds has declined. The Government plans to raise 250 trillion VND (11.57 billion USD) from selling G-bonds in 2015, though only 56 trillion VND (2.59 billion USD) in bonds were bought in the first quarter.

During the regular press meeting in early April, the Ministry of Finance also warned that the State budget could be short 32 trillion VND (1.48 billion USD) this year to spend on development investment and debt payments.

The ministry recommended that the Government take measures to save 10 percent of planned recurrent expenditures from now through the end of the year, besides issuing long-term international bonds to restructure domestic short-term loans.
VNA/VNP