Although Vietnam’s economy expanded a better-than-forecast 6.93% in the June quarter from a year earlier, the International Monetary Fund projects full-year growth to come in at 5.8% - behind Philippines’ estimated 6.2%. - Photo: Vietnam News/ANN
HANOI (Bloomberg): Vietnam is scrambling to boost state spending after the pace of budget utilization in the first-half of the year decelerated, as government officials wary of an anti-graft campaign dither over decisions.
The government aims to turbo-charge spending in the second half to ensure at least 95% of its budget is utilized, up from just 29.4% in the January-June period, according to a website post.
The expenditure ratio was slower than the 30.5% notched in the same period in 2023, the government said in a separate post.
"Quickening public investment is crucial for the country’s economic growth now,” said economist Tran Dinh Thien, a member of the National Financial and Monetary Policy Advisory Council. "It’s like pumping blood into a weak body.”
Especially crucial would be allocating funds for infrastructure that has a ripple effect across the economy, he said.
Although Vietnam’s economy expanded a better-than-forecast 6.93% in the June quarter from a year earlier, the International Monetary Fund projects full-year growth to come in at 5.8% - behind Philippines’ estimated 6.2%.
Even that performance isn’t guaranteed for the trade-reliant nation, as much depends on a durable recovery in global demand for goods.
While public spending remains the one thing that the government can control, officials have been putting off financial decisions for fear of being snared in the Communist Party’s "blazing furnace” anti-corruptive drive.
"Officials are afraid of taking responsibility and being held accountable if anything goes wrong given such inconsistent and contradicting regulations of which they can get stuck in between,” Thien said. "All these has significantly hindered the spending of public investment.”
Prime Minister Pham Minh Chinh called on state officials to show "determination to overcome the situation of avoiding taking responsibility and fear of making mistakes,” according to the government post Tuesday.
--With assistance from Nguyen Xuan Quynh. -- ©2024 Bloomberg L.P.
