Oil prices drop, budget deficit 20,000 billion

If the oil price drops by 1 USD, the budget will lose 1,000 billion and in 2015, if the oil price is at 80 USD/barrel, the budget will lose 20,000 billion.

At the regular Government press conference in November held on the evening of December 1, Minister and Head of the Government Office Nguyen Van Nen said that for every $1 drop in crude oil price, the budget loses VND1,000 billion.

Responding to a reporter's question about how to offset the budget deficit when the world crude oil price has dropped sharply in recent times, Minister Nguyen Van Nen said: "Current oil prices are falling rapidly and may increase again in 2015, but the situation is still complicated. The Government has reported its budget balance plan to the National Assembly, estimating the oil price at 100 USD/barrel. Currently, the oil price has dropped by about 30 USD/barrel and this number may change. We calculate that for each barrel of oil that drops by 1 USD, the budget loses 1,000 billion VND, and so we estimate that if in 2015 the figure is around 80 USD/barrel, we will lose 20,000 billion VND."

Minister and Head of the Government Office Nguyen Van Nen at the regular press conference in November (Photo: Viet Dung).

Regarding the plan to balance the budget to compensate for the deficit, Minister Nguyen Van Nen added: “The Ministry of Finance has a plan to compensate. Currently, Vietnam has many exploitation points and the oil price at each point is from 35 to 70 USD/barrel. At the regular Government meeting, the Prime Minister directed to consider oil fields with high prices that should not be exploited at this time, and wait until the price increases to exploit. Currently, we should only exploit low-priced fields that can bring us relative profits.

At the same time, we are calculating and balancing other sources to compensate for the possible shortfall. Up to now, we can be temporarily assured that the compensation plan proposed by the Ministry of Finance is feasible."

The sharp drop in world oil prices in recent times has led to a sharp drop in domestic gasoline prices, currently only around 20,000 VND/liter. However, the transportation fares of enterprises have not changed much. In response to the question about the fares of transportation enterprises, Ms. Nguyen Thi Minh, Deputy Minister of Finance, said that the ministry has sent an official dispatch to the Ministry of Transport and the People's Committees of provinces and cities to coordinate in controlling fares according to the reduction in gasoline prices.

Ms. Minh also announced the results of inspections and work in several major cities. In Hanoi, taxi service businesses have declared fare reductions with an average discount rate of 2-10%; fixed-route passenger transport businesses have declared fare reductions with an average discount rate of 5.8-10% and freight transport businesses have declared fare reductions of 3.4-3.9%.

In Da Nang, taxi businesses declared a price reduction of 3-32%, fixed-route businesses will also calculate and declare a reduction, and freight transport businesses have declared a reduction of 3.2-6.7%.

In Ho Chi Minh City, taxi service businesses have declared fare reductions of 2.7-9% (depending on the distance), and fixed-route passenger transport has reduced fares by 2-11.33%.

On December 1, 2014, the Ministry of Finance issued Official Dispatch No. 17496/BTC-QLG on continuing to strengthen the management of automobile transportation fares in the area and implementing Joint Circular No. 152/2014/TTLT/BTC-BGTVT (replacing Joint Circular No. 129/2010/TTLT-BTC-BGTVT, which has come into effect) to the Departments of Finance of provinces and centrally run cities./.

According to VOV