Tin mới
Needed: Stipulating Public Debt Ceiling (09/11)
09/11/2011 - 16 Lượt xem
According to the Government, as of December 31, 2010, the ratio of government debts to GDP was 45.7 percent, while foreign debts totaled 42.2 percent and public debts 57.3 percent. According to Government plans, the ratio of public debts to GDP will stand 54.6 percent as of December 31, 2011 and 58.4 percent as of December 31, 2012. (based on a six percent GDP growth scenario).
At the plenum on October 28, 2011, a number of deputies said that the ratio of public debts to GDP in Vietnam was higher than other countries in the region (44 percent in Thailand, 39.7 percent in Indonesia and 47.3 percent in the Philippines) and it was tending to increase so it was necessary to release warnings of a danger to increases in public debts.
In his explanation to the National Assembly, Minister of Finance Vuong Dinh Hue said that the 2011 and 2012 public debt ratio estimates were constructed based on a six percent GDP growth scenario, and that the estimates would be lower if they were based on a 6.5 percent GDP growth. (GDP growth expected to reach 6-6.5 percent in 2012).
Hue continued that foreign debts account for about 58 percent of all debts that Vietnam owes and were tending to decrease and that domestic debts represent 42 percent of the total and were on the increase. Increases in domestic debts would be a good sign because they would mean a decrease in the country's reliance on foreign debts as well as an easier access to debts, he added. Of all Vietnam's public debts, official development assistance (ODA) debts represented 75 percent, other preferential loans accounted for 19 percent and commercial loans stood at seven percent. ODA loans usually span a long period and have preferential interest rates (those from the World Bank usually have a period of 40 years, a grace period of 10 years and an interest rate of 0.75 percent per year, while those from the Asian Development Bank or ADB usually have a period of 30 years, a grace period of 10 years and an interest rate of one percent per year, while those from the Japanese government usually have a period of 30 years, a grace period of 10 years and an interest rate of one to two percent per year). Meanwhile, the ratio of commercial loans to public debts in developed countries and countries that have escaped from poverty is high and unlike that in Vietnam. The method that Vietnam uses to calculate the ratio of public debts to GDP is different from other countries. European countries calculate this ratio according to money flow values, while Vietnam calculates the ratio using the title value method. If Vietnam makes the calculation according to money flow values its public debt ratio will be lower than that reported to the National Assembly.
Most of ODA and other preferential loans that Vietnam borrows are invested in transport, agricultural and rural infrastructure development. They have made an important contribution to economic growth in Vietnam over the past years.
Hue said that the Government has considered and will draft a strategy for managing public debts properly in a context where ODA and other preferential loans are gradually decreasing, while commercial loans are tending to increase.
Following the Government's guidelines, the Ministry of Finance devised a strategy for public debt management and development to 2020. The ministry is contemplating medium-term plans and concrete action plans to realize the strategy as soon as it is approved. The Government provided guidelines for improving regulations on publicizing, making explicit and strengthening the capability to manage public debts while allowing the Ministry of Finance to preside over construction of a national credit rating project to improve the country's national credit rating to make it more favorable for the Government and businesses to access lowest interest rate loans.
Debts that the Government have to pay annually represent about 14-16 percent of the total state budget. According to international rules, a rate of 30 percent or less is safe. A matter of concern is how to borrow loans, use them efficiently and pay off debts. Minister of Finance Vuong Dinh Hue said that in the coming time, if public debt use management and economy and state investment restructuring are strengthened and macroeconomic indexes such as GDP, foreign reserves and foreign exchange rates are improved and stabilized, public debt management will be better. He argued that there was no need to be pessimistic about current public debts, but warned about overly optimistic views, he said.
After verifying the Government's report, many members of the National Assembly Finance and Budget Committee noted that apart from data featuring total value and the ratio of public debts to GDP, loan use efficiency, the economy's potential, loan payment deadlines and changes in exchange rates of related foreign currencies were all bases for assessing public debt-related safety. The committee proposed that medium-term public debt ceiling be stipulated to avoid a situation in which national finance is affected by unforeseeable changes in the world economy. It also proposed that the Government observe Section 2 of Article 8 in the Law on Public Debt Management, make annual reports on public debts, and keep the National Assembly informed about public debts./.
Source: VEN
Source: VEN
