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Balance of payments deficit to fall by half
Vietnam’s deficit in balance of payments this year is likely to reach US$4 billion, a sharp drop from last year’s gap of $8.8 billion, according to a recent government’s report to the National Assembly’s Economic Committee.
Foreign investment remains the same as in previous forecast at VND171.9 trillion ($8.5 billion), equivalent to 21.5 percent of total social investment capital, up by nearly 28 percent compared to 2009.
Meanwhile, ODA disbursement in 2010 is likely to reach about $3.5 billion, including borrowed capital of $3.2 billion and non-refundable aid of $300 million.
Trade deficit in 2010 is forecasted to be about $13.5 billion, equivalent to 19.8 percent of total exports.
This figure is $500 million lower than estimated figure of Ministry of Planning and Investment since exports have increased correlatively, estimated at $68 billion, while imports remains at $81.5 billion.
But the evaluation report of the NA Economic Committee has showed concern over the increasingly high trade deficit, as the absolute number is estimated at $13.5 billion, up by five percent compared to $12.85 billion in 2009.
Excluding exports of precious stones and metal, trade deficit still stands at over 23 percent of exports.
This is the main factor that has caused current account to run a deficit of about10 percent of GDP. Prolonged trade deficit over many years has decreased foreign exchange reserves, increased national debt, and put pressure on domestic currency.
Large current account deficit along with high budget deficit and increasing public debt would be the major obstacles for the economic growth in the next years, according to National Assembly Economic Committee.
The evaluation report cited that “according to the criteria of IMF, current account deficit at 8 percent of GDP would affect the macro balance of the country”.
However, considering the composition of the balance of payments in the government’s report, many balance criteria are based on more optimistic view than assessment of the Ministry of Planning and Investment.
Vietnam’s trade balance at FOB price in 2010 is estimated to run a deficit of just $8.2 billion. Service deficit is expected to be $0.55 billion and investment income runs a deficit of $4.2 billion, while capital transfer sees a surplus of $7.5 billion.
Those indicators in the report of Ministry of Planning and Investment were respectively (-) $10.1 billion, (-) $1.9 billion, (-) $5.4 billion and $6.9 billion.
Deficit of the current account balance was improved from $10.6 billion in the report of Ministry of Planning and Investment to $5.48 billion under the government’s view.
The figures on capital and financial account balance continue showing the government’s optimistic assessment, when the surplus increases to $11.54 billion, $1.3 billion higher than the figure given by Ministry of Planning and Investment previously.
The overall balance maintains a deficit of about $4 billion. This is the main reason affecting supply and demand, increasing dong/dollar exchange rate, reaffirmed the government in the report.
For 2011, government’s report shows that balance of international payments is balanced between foreign currency inflows and outflows.
Trade deficit is estimated at $9.51 billion, services is expected to run a deficit of $1.75 billion, investment income is expected to be in $5.12 billion deficit, currency transfer is expected to be in $5.5 billion surplus, the current account balance thus would run a deficit of nearly $10.9 billion.
This deficit would be offset by the surplus in capital and financial balance of $11.8 billion. The overall balance would be in surplus of about $500 million.
tuoitrenews, vneconomy, Government website
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