The plummeting world crude oil prices will not have too great impact on Vietnam’s State budget revenue, said Vo Thanh Hung, head of the State Budget Department under the Ministry of Finance.

Illustrative image (Photo: VNA)

Hung made the comment after the price on the May futures contract for West Texas Intermediate (WTI), also known as Texas light sweet, on New York’s Nymex on April 21 fell into negative territory -- minus US$37.63 a barrel.

“The sharp decline will certainly reduce State budget revenue as the 2020 State budget estimate is based on an estimated oil price of about US$60 per barrel,” he said.

“However, its impact will not be too big,” he noted, explaining that in recent years, there has been a change in the revenue structure, with revenue from crude oil currently accounting for less than 3% of the total.

According to Hung, the proportion of revenue from crude oil in the total budget revenue sharply tumbled from 13% in the 2011-2015 period to 4% in 2016 - 2018, and 3.2% in 2019.

In 2020, revenue from crude oil is estimated at VND35.2 trillion (US$1.5 billion), making up only 2.3% of the total State budget revenue and representing a drop of VND11.6 trillion compared to the previous year, with domestic output expected to reach 9.02 million tonnes.

Data from the Ministry of Finance shows that in the first quarter of 2020, budget revenue from crude oil approximated VND14.6 trillion (US$622 million), equivalent to 41.4% of the estimate and up 7.3% year on year. Crude oil prices in the world market have plunged recently, but due to the delay in payment, Vietnam's average price of oil from the beginning of the year to the end of March remained at US$65 per barrel, US$5 per barrel higher than the estimated price.

Meanwhile, the country’s oil output was estimated at 2.8 million tonnes in the period, equal to 26.8% of the plan.

Hung also said that Vietnam sees oil exports less than imports so its economy will benefit from low oil prices which help ease difficulties for production enterprises, thereby improving domestic budget revenue.

According to the General Department of Customs, in the first quarter of 2020, Vietnam’s crude oil exports were estimated at 1.2 million tonnes, worth US$532 million, up 11.6% in volume but down 8% in value over the same period last year.

Meanwhile, the country spent over US$1 billion importing 1.85 million tonnes of petroleum of all kinds, down 17.6% in value and 10.8% in volume year on year.