Vietnam’s 2026 budget, explained

Strong economic performance sent government revenue soaring in 2025, putting the country in an enviable fiscal position.

As Vietnam’s National Assembly prepares to pass next year’s budget, it is pretty clear the country is entering 2026 in an enviably solid fiscal position, with a strong balance of trade and robust economic growth. If anything, one of the biggest issues with Vietnam’s budget is that government units are struggling to spend all of the funds that have been allocated to them.

First, the macroeconomic picture. Economic growth for 2025 is expected to come in at 6.7 percent, much higher than was forecast last year. Vietnam depends heavily on exports and trade, so achieving this level of growth at a time of deep uncertainty in the global economy is no small feat.

Vietnam, for various reasons, has managed to weather the storm better than some, continuing to attract foreign investment while pumping out exports. Through the first nine months of 2025, the Ministry of Finance reported a trade surplus of nearly $17 billion and foreign investment of $28.5 billion.

This strong economic performance sent government revenue soaring in 2025 to approximately $91 billion, 21.5 percent higher than was forecast. Thanks to the increased revenue, the budget deficit in 2025 is expected to come in around 3.6 percent of GDP, while total public debt is stable at 36 percent of GDP. This places Vietnam in a strong fiscal position as it enters the New Year, and its 2026 budget reflects this.

The revenue target in 2026 is $96 billion, an increase of 5.9 percent compared to 2025. The government is leaning into a more aggressive fiscal posture in the coming year, authorizing budget expenditures of $120 billion. That is a nearly 23 percent increase from 2025, and will lift the fiscal deficit to 4.2 percent of GDP. The National Assembly seems unbothered by this, and probably for good reason.

Fiscal deficits in emerging markets are not something to be feared for simply existing. The important question is why a country is running a deficit. Thailand, for instance, is running large deficits right now, but they are not deficits of choice. Thailand’s economy is under pressure, so the government must borrow to try and offset the slowdown. Given that existing government debt already exceeds 60 percent of GDP (almost double Vietnam’s total public debt levels), the government would likely prefer to be trimming the deficit right now rather than running it at the maximum limit.

Vietnam, on the other hand, is choosing to borrow more because it can afford to do so, supported by strong economic growth and manageable levels of existing public debt. Vietnam’s economy is expected to remain strong in 2026, so it’s an opportune time for the government to leverage its expanding fiscal firepower to invest in economic development.

People are also starting to notice some oddities in Vietnam’s real estate sector, which suggests the existence of a mispriced imbalance between the supply and demand of housing in some parts of the country. Many of Vietnam’s largest companies and banks have significant exposure to the real estate sector, so if there is a bubble forming, now might be a good time for the state to tap some of its expanding fiscal firepower to deflate it in an orderly fashion and minimize broader systemic risk.

We know that Vietnam has big plans for transportation infrastructure, including urban transit and ambitious high-speed railways. Until now, the government has been somewhat conservative in leveraging its financial resources, including the balance sheets of SOEs, to speed up infrastructure development. We also know that bubbles get worse the longer they go without being deflated. Given the supportive macroeconomic and fiscal conditions as we enter 2026, there’s no time like the present.

By James Guild – The Diplomat – December 9, 2025