Strategy outlined for growth goals

Prime Minister Pham Minh Chinh last week outlined the priorities to spur on economic growth in 2025 to authorities at the provincial and city level, as well as governmental agencies.

Authorities at all levels must work on suitable use of resources, photo Le Toan

After stating that the domestic economy will have grown by more than 7 per cent in 2024, the government has set a new goal of hitting a double-digit economic growth rate for 2025. This is higher than the National Assembly’s (NA) goal of as much as 7 per cent.

A 1 per cent growth rate means an additional $4.7 billion based on calculation at a GDP scale of $470 billion for 2024, and can also mean an additional 300,000-350,000 jobs for the economy.

To reach this new growth goal, the government has ordered a prime priority to be placed on “strongly boosting growth with high speed and breakthroughs, in association with macroeconomic stability, inflation control, and ensuring all major balances of the economy with high surpluses,” the PM’s statement read.

The government will also “maximise the mobilisation of all possible resources in the economy and society for economic development”, it said.

To this end, the Ministry of Planning and Investment and Ministry of Finance (MoF) will work with relevant agencies and localities to design solutions to diversify these resources from the state, the public, enterprises, and investors, as well as resources from public-private partnerships to develop strategic infrastructure systems.

The government has allowed the two ministries to study and utilise advantages in public debt, government debt, and budget deficit to mobilise more resources for development investment. It has also required them to mobilise and effectively use resources from the stock market and corporate bonds.

Under the government’s latest estimations, in 2024, total public debt in GDP in Vietnam will be about 36-37 per cent, lower than the initial target of 39-40 per cent, and the same as 37 per cent recorded in 2024. This will be far lower than the permissible limit of below 60 per cent of GDP.

The government debt to GDP will be 33-34 per cent, the same as 34 per cent recorded in 2024, and the external debt to GDP will be 32-33 per cent, lower than 33.5 per cent seen in 2023. This will also well lower than the allowable cap of 50 per cent of GDP.

It is also estimated that by late 2025, total public debt will be 36-37 per cent of GDP; government debt will be 34-35 per cent of GDP; the nation’s foreign debt will be 33-34 per cent; and the average state budget deficit for the 2021-2025 period will be 3.7 per cent. These figures are all lower than the maximum levels allowed.

The government has expected that total state coffers in 2024 will be $173.12 billion, up from $161 billion in 2023. This includes $78.05 billion for revenue, up 6.8 per cent on-year, and $95.07 billion for expenditure, up 7.5 per cent on-year. Total overspending will be $17.02 billion.

Calculations from the MoF showed that in the first 11 months of 2024, the Vietnamese economy witnessed a state budget surplus of $10.32 billion. Total state budget expenditure was estimated to have come in at $65.03 billion, representing an on-year of 4.7 per cent.

At the same time, the total state budget revenues were estimated to have reached $75.35 billion, up 16.1 per cent on-year and 4.73 per cent as compared to the goal for the whole year. This has also climbed 3.1 per cent as compared to that recorded for the whole of 2023.

Domestic revenues are estimated to sit at $62.77 billion, reflecting an on-year expansion of 16.8 per cent, and responsible for 83.3 per cent of the total state budget revenue.

Under a NA resolution released in November, the total state budget revenues for 2025 are set to be about $81.95 billion – up 15.6 per cent as compared to the estimates in 2024 and up 5 per cent as compared to the estimated implementation this year.

Meanwhile, the total state budget spending for 2025 is set to stand at as much as $106.2 billion, up by about more than $17 billion over the estimates for 2024. This will ensure sufficient demands for investment into infrastructure projects of national importance, and for paying salaries for the public sector and for other already-promulgated policies.

The total state budget deficit for 2025 will be $24.25 billion, which is tantamount to 3.8 per cent of GDP, and will still ensure safe thresholds for public debt, government debt, and the country’s debt.

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