The MoF’s report, released at the conference reviewing its performance in 2006 held in Hanoi on November 23, said that the state budget overspending in 2007 is expected to reach VND56,500bil ($3,531mil), or 5% of GDP. This is also the figure that has been approved by the National Assembly.

The total Government’s debts have been equal to 37.3% of GDP, while national foreign debts equal to 31% of GDP, which, according to the MoF, are within the safety limit.

The Government is considering a further issuing of international bonds, and guaranteeing for corporate loans. However, as Minister of Finance Minister Vu Van Ninh pointed out, the foreign debts must be put under stricter control.

Regarding the ODA (official development assistance), MoF said it would reject allocating loans to unnecessary and ineffective projects. By the end of 2005, the Government has signed an agreement on borrowing ODA capital worth $22bil, a half of which has been disbursed.

According to the MoF, enterprises will be able to access foreign loans with the guarantee from the Government more easily, and the opportunities are open for all economic sectors, not only for state owned enterprises as seen previously. However, enterprises will have to meet higher requirements to be eligible to be guaranteed by the Government. Especially, enterprises must prove their solvency. The Government will only guarantee for loans of $10mil and higher.

The MoF is drafting a lot of important legal documents regulating the borrowing and management of foreign debts. An ordinance on debt management for the public sector will be compiled and promulgated. A government decree, regulating the issuance of Government bonds in the international market will also be enacted.

The MoF is planning a medium term programme on borrowing and paying foreign debts, a programme on corporate debt management, and a system allowing them to warn about the risks in borrowing and paying debt.

In 2007, the Government plans to put up VND49,160bil ($3.072bil), which accounts for 14.2% of the yearly total spending, for paying debts. Of this amount, VND37,990bil ($2,374bil) will be for domestic settlement, and VND10,400bil ($650mil) for foreign debt payment.

Source: Thời báo Kinh tế Việt Nam