Fiscal deficit, public debt and macroeconomic risks in Vietnam

Abstract

    This paper aims to examine Vietnam's fiscal deficit and public debt as the country completes a halfway of its socio-economic development plan, 2011-2015. The analysis reveals that despite of high revenue-GDP ratio as compared to that of other countries in the region fast-growing state expenditure, especially current component, has been leading to Vietnam's persistent fiscal deficit in recent years. In addition, the analysis also shows that Vietnam's public debt risks mainly lies in the under-reported debt of state owned enterprises. Prolonged fiscal deficit and rising public debt are causing unfavorable environment of inflation, interest rates, exchange rates and growth, threatening the economy's stability in the future.