Vietnam economy continously has to face with uncertainties such as low economic growth, inflation, and trade balance deficits and especially budget deficits which lead to double deficits in recent years. This broadly influences on various areas in the country’s economy, especially the private sector. However, Vietnam’s policies to reduce the budget deficit of Vietnam have not really proved to create a sustainable budget. Indeed, although policies to reduce budget deficit, public expenditure and improve allocation efficiency in combination with improvements in tax policy have been implemented quite drastically after the crisis period from 2007 to 2009, signs of budget deficit reduction have not been clear. Especially, the underlying causes of this fiscal uncertainty have not been figured out and made positive changes. The paper systemises principles and theories relating to budget decifit. After that, this analyses the actual performance of Vietnam’s budget deficit and re-evaluates the root causes of the imbalances leading to the fiscal uncertainty. The paper also emphasises that the procedure for reducing budget deficit should been planned in the long-term. Drawing on the findings of the study, some policy recommendations and the pathway to 2020 are later proposed as to reduce the budget deficit sustainably.
Quynh Tho Nguyen, Banking Academy, Vietnam
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