The central bank has lent the finance ministry $1.33 billion to help ease State budget overspending. — Illustrative photo cafef.vn

HA NOI (Biz Hub) — The central bank has lent the Ministry of Finance VND30 trillion (US$1.33 billion) to help ease tension related to State budget overspending.

Dao Xuan Tue, from the ministry's State budget department, made the announcement in its third-quarter press conference on October 2, adding that the "normal" short-term loan will be refunded by the end of this year.

Minister of Finance Dinh Tien Dung proposed the loan in late July, while some economists revealed that national budget spending had reached VND1,147 trillion (US$50.98 billion), exceeding the VND911 trillion ($40.49 billion) quota allocated for budget revenues in 2015.

The ministry's latest report said the State budget overspending had reached some VND27.54 trillion ($1.22 billion) in September, driving the cumulative overspending for the first nine months of this year up to VND140.97 trillion ($6.27 billion).

Government bond issuances had witnessed significant obstacles for the last few months, although inflation rates staying below one per cent enabled the ministry to increase the interest rate for five-year bonds up to 6.4 per cent.

According to the report, the State Treasury sold bonds worth about VND127.43 trillion ($5.66 billion) during the first nine months, representing only half of this year's target and 60 per cent of the figure recorded in the same period last year.

The amount had already included the $1 billion that the Treasury mobilised from Bank for Foreign Trade of Viet Nam, or Vietcombank, in April.

The ministry said sluggish bond sales were due to disadvantages in the financial and monetary markets during the third quarter, which resulted from the depreciation of the Chinese yuan and other currencies in the region.

"Developments in the foreign currency market has strongly impacted investors' psychology in the bond market, leading to sharp decline in the demand for government bonds," the report explained.

The ministry said the sharp decline in oil prices will also hinder the targeted budget revenues the country wishes to achieve this year, while Deputy Minister Vu Thi Mai reportedly said it will strive to reap revenue surpluses from domestic sources to compensate for the falling oil turnover.

The ministry told VnEconomy online that it will continue to mobilise significant capital separately from domestic commercial banks in the coming months.

State Bank of Viet Nam Deputy Governor Nguyen Thi Hong said the central bank will take necessary measures to regulate money flows in line with macro-level goals related to inflation, and economic stability and growth. — VNS