Vietnam faces potential state budget loss of US$1.82 billion on Covid-19

Vietnam would face a potential loss of VND42.3 billion (US$1.82 billion) in state budget revenue due to the impact of the Covid-19 epidemic, according to the Ministry of Planning and Investment (MPI).

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The MPI has said in a report that the outbreak could lead to a decline in revenue from the domestic taxes, trading activities and crude oil, local media reported.

In case the Covid-19 epidemic is contained in the coming two or three months, industries such as tourism, transportation, commerce, agricultural export – import, among others, are predicted to be the most vulnerable.

Other business activities with high flexibility would face a decline in growth, while only a handful can maintain normal operations, suggested the MPI.

However, in case the epidemic persists for around four to five months, or even longer, manufacturing sectors such as textile and garment, footwear, electronics, consumption goods with high dependence on input materials from China and even multinationals such as Apple, Samsung or LG would struggle.

The MPI said the implementation progress of projects using Chinese capital, labor and input materials would slow down and affect growth of related fields and sectors.

Additionally, a stagnation in Vietnamese exports to China due to the outbreak would cause negative impacts on domestic production.

The MPI has drawn up two scenarios. In the first scenario, the state budget revenue would reach VND1,494 trillion (US$64.30 billion), down VND18.1 trillion (US$779 million) or 1.2% compared to the initial estimate, if the outbreak is contained right in the first quarter.

In another scenario where Covid-19 is put under control in the second quarter, the budget revenue is estimated at VND1,470 trillion (US$63.26 billion), down VND42.3 trillion (US$1.82 billion) or 1.6% of the initial estimate.