VN manages to control the public debt
VIETNAM, May 21 –
Raising capital from public debts for the socio-economic recovery program is necessary to ensure the efficient use of capital and the security and sustainability of the state budget. — Photo danviet.vn
HÀ NỘI — Việt Nam has managed to control public debt to a safe level with a gradual slowdown in year-on-year increases. However, according to the Ministry of Finance, the economy has been hit hard by the COVID-19 pandemic over the past three years.
The Ministry of Finance said that the process of raising capital from public debts for the socio-economic recovery program should pay attention to the efficient use of capital and the security and sustainability of the state budget. and medium- and long-term public debt.
Statistics from the Ministry’s Debt Management and External Finance Department showed that Việt Nam’s public debt fell from 63.7% of GDP in 2017 to 55.9% in 2020. When the GDP was revised , public debt remained at 43.7%.
The department’s deputy director, Võ Hữu Hiển, said the policy of limiting the issuance of government guarantees for new loans, improving the effectiveness of official development assistance (ODA) and foreign concessional loans has contributed to putting the public debt back on a downward trend.
The percentage of foreign loans in public debt also fell from 60% in 2010 to 40% in 2016 and nearly 33% by the end of 2021, which helped reduce currency risk, Hiển said. Government bonds accounted for 86% of domestic debt, and issues since 2017 were all for terms of five years or more.
According to Đinh Trọng Thịnh of the Academy of Finance, the level of public debt remained within the limit approved by the National Assembly, which theoretically means that Việt Nam could increase its borrowing to meet development demand.
However, the capital absorptive capacity of the economy must be taken into account, especially in economies like Việt Nam, which had an average capital absorptive capacity. Japan and the United States had high levels of public debt, but they had enormous economic potential with good capital absorption capacity and efficient use of capital.
The ministry said lessons learned from the previous period were that increased spending, looser fiscal and monetary policies, and expansion of government-guaranteed lending to stave off an economic decline in 2008-2011 led to a rapid increase in the level of public debt, averaging 18.1% per year. year in 2011-15, creating strong short-term debt payment pressure.
The Ministry of Finance said it was necessary to ensure the efficient use of capital and the security and sustainability of the state budget.
Under the recently approved public management program for 2022-2024, the government planned to borrow a maximum sum of VN646.8 trillion ($27.5 billion) to cover overspending and debt repayment. .
Hiển said that depending on the disbursement of capital, the ministry would be flexible in using appropriate tools to mobilize domestic and foreign resources to meet capital demand, including issuing government bonds. , ODA and foreign concessional loans.
The primary focus would be on raising capital from domestic sources. If domestic sources were still well below demand to cover excess spending for development investments and debt repayment, the government would consider issuing international bonds when market conditions were favourable. —VNS