Public debt management must not be slackened
Thursday, 2017-11-09 04:24:53
NDO - According to a government report, Vietnam's public debt is expected to reach 62.6% of GDP by the end of 2017, down one percentage point from last year but the absolute outstanding debt will increase by VND0.27 quadrillion to VND3.13 quadrillion.
Although the government has given assurances on its ability to repay, public debt obligation is still growing and will peak during the 2020-2022 period when loan requirements will be stricter with higher costs, which will continue to place the state budget under pressure.
Vietnam's public debt ratio is expected to rise to 63.9% in 2018, although the government is attempting to prevent the ratio from exceeding 65% of GDP during the 2016-2020 period and reduce it to 60% or lower by 2030.
In order to control public debt, the government has pledged to borrow only within the approved annual plans, tighten its spending and to curb medium and long-term loans by State-owned enterprises at US$5.5 billion a year.
The highest annual growth rate of short-term foreign loans must be between 8% and 10%. Furthermore, public debt will be restructured in a manner that reduces foreign debt and increases domestic debt.
It has been demonstrated that high public debt will lead to costly and unexpected consequences for the country, therefore, it is more cost effective and easier to prevent the public debt from rising than dealing with the repercussions.
In the time ahead, it is necessary to fine-tune the law on public debt management and the public debt management model by publicising debt information, enhancing accountability and strengthening the National Assembly's supervision in order to prevent the overspending of public funds.
In addition, the growth model should be renovated to improve productivity and make effective use of available resources, while streamlining the state apparatus aligned with restructuring the State budget and public institutions.