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Utilizing public debt with caution (18/9)
18/09/2012 - 20 Lượt xem
The 2012 macro-economic report in the framework of the project on supporting the capacity of staff, evaluation and monitoring of macro-economic policies held by the Economic Committee of the National Assembly and sponsored by the United Nations Development Program in Vietnam evaluated that the budget deficit and public debts have increased rapidly. According to the Ministry of Finance, Vietnam's public debt rose from 40 percent in 2007 to 44.7 percent in 2009 and more than 57 percent of GDP at the end of 2010, and decreased slightly to 54.6 percent in 2011 due to high inflation.
According to the Department of Debt Management and External Finance of the Ministry of Finance, Vietnam's total public debts in the 2009-2011 period reached 52.6, 57.3 and 58.7 percent of GDP respectively. In particular, external debt was 39, 42.2 and 41.5 percent respectively.
Public debt in Vietnam tends to increase. According to the Ministry of Finance, Vietnam's public debt in 2012 would be up to 58.4 percent of GDP and 60-65 percent of GDP in 2015.
According to the Organization of Economic Cooperation and Development (OECD), the safe level of public debt stood at 50 percent of GDP and lower. This will create a safe limit to against adverse shocks in the future.
However, according to Market and Price Research Institute of the Ministry of Finance economic expert Vu Dinh Anh, it was difficult to give the safe level of public debt to apply in all countries because different economies have their characteristics and different methods of using loans. For example, the current US's public debt is 100 percent of GDP, equivalent to US$16 trillion; while the average public debt of the Euro zone countries is over 80 percent of GDP; and Japan's public debt is over 200 percent of GDP. However, when analyzing public debt, the safe level of public debt is not given and GDP and the country's ability to repay loans are analyzed.
National Center for Socioeconomic Information and Forecast (NCSIF) of the Ministry of Planning and Investment director Le Dinh An said that Vietnam's public debt was not an alarming issue. However, domestic revenues and export earnings can decrease due to the decline in global prices. The budget revenue can also decline since businesses have to face difficulties, bankruptcy or dissolution (total budget revenues in the first eight months of 2012 totaled 60.4 percent of budget estimates); foreign exchange reserves continue to fall. In addition, when Vietnam officially becomes the middle-income country, preferential loans with low interest rates in Vietnam will reduce and commercial loans with much higher interest rates will increase. Therefore, it is necessary to caution public debt in the management.
Other issues such as the State savings and the Government savings also need to be considered. "It is necessary to tighten the expenditures to make Vietnam's public debt not increasing," Le Dinh An said.
In the long term, it is necessary to have an authority agency to manage public debt and provide information for the analysis of public debt in Vietnam. In fact, although the Public Debt Law was published in 2009, there still have no authority agency publishing information on public debt./.
Source: VEN
Source: VEN
