March 4 (Bloomberg) -- Vietnam’s government said it will spend 300 trillion dong ($17 billion) this year to halt a slowdown in economic growth amid the global financial crisis.

The amount, almost a quarter of the Southeast Asian nation’s $71 billion economy, will be used to develop infrastructure, spur exports, and fund other social security projects, Prime Minister Nguyen Tan Dung said in a statement on the government’s Web site late yesterday.

The spending is part of the government’s 491 trillion dong overall budget for this year, which is 23 percent higher than the 399 trillion dong it projected for 2008. Asian governments have unveiled fiscal stimulus packages worth almost $700 billion to kick-start local consumer and business spending as demand for the region’s electronics, seafood and other goods falters.

“The spending will help boost economic growth and investors’ confidence,” Cao Sy Kiem, president of the Vietnam Association for Small and Medium-sized Enterprises, said in a telephone interview from Hanoi today.

Vietnam’s benchmark stock index tumbled 66 percent last year on concern the deepening global slump would hurt the economy. The nation had attracted funds after it adopted the ‘doi moi’ economic reforms since 1986 and became one of Asia’s fastest-growing economies over the past decade.

Vietnam’s economy expanded 6.2 percent last year, the least in nine years and slower than an 8.5 percent pace in 2007, as recessions in the U.S, Japan and Europe hurt exports. Gross domestic product may increase 2.5 percent this year, Fitch Ratings predicts, and Dung said Feb. 4 Vietnam’s economy will worsen in 2009.

Stimulus Plan

The government is preparing an economic stimulus package of as much as $6 billion in spending, tax breaks and other measures, some of which will be funded through bond sales, Deputy Minister of Planning and Investment Nguyen Duc Hoa said on Dec. 31. The statement yesterday didn’t say how much of the stimulus package would come out of the 2009 budget.

The government said on Jan. 15 it will use 17 trillion dong from its stimulus package to subsidize loans for companies that export, import or produce essential products for the economy.

Vietnam’s National Assembly approved a plan to raise 55 trillion dong selling bonds this year to fund the stimulus measures, according to a statement dated March 2 on the Vietnam Banks Association’s Web site.

The nation plans to sell U.S. dollar-denominated bonds for the first time in more than three years this month, the finance ministry said yesterday. The state treasury said on Feb. 4 that it may increase local-currency bond sales by 6 percent to 22 trillion dong in the first quarter.

To contact the reporter on this story: Ta Bao Long in Hanoi at longta@bloomberg.net

Last Updated: March 4, 2009 00:54 EST