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Economic growth cannot reach the target, "increasing" public debt

14:36 | 26/10/2016

VCN- The expenditure budget operates as expected, but the economic growth cannot reach the target, increasing the ceiling of public debt. This comment by the Deputy Prime Minister, Mr. Vuong Dinh Hue in the lobby of the National Assembly’s headquarters on the morning of October 22, 2016.

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economic growth cannot reach the target increasing public debt
The Deputy Prime Minister, Mr. Vuong Dinh Hue speaks to the press.

In the context of a slow GDP growth rate, is it feasible when the Government has decided to mobilize 10 million billion vnd to restructure the economy? Moreover, in the previous proposal of restructuring the economy, the Government could not give specific numbers, but why can the Government now calculate the amount of mobilization, Sir?

If we calculate specifically and carefully, we’ll soon figure out. The specific figures are also the orientation, which is on the basis of the Law on Investment and the Law on State Budget under the medium-term financial plan for 5 years and the medium-term public investment plan. Thus, it is easy to balance the economy much better.

There have been public investment projects exceeding the original estimate of capital for a long time. Does the Government anticipate this continuing?

After the Prime Minister’s Directive 1792/ CT-TTg on strengthening investment and capital management from the State budget and Government bonds was issued, State and local authorities are only responsible for the approved capital. If any projects exceed the estimate, people who directly carry out the investment decisions for those projects shall be responsible for the over-expenditure. Thus, we need to continue to tighten discipline on budget.

Does the Government propose to increase the public debt ceiling for investment and development?

The problem of increasing public debt ceiling has been discussed a lot, specifically, we are poor, so we need to borrow to develop. Many experts also said that the public debt in developed countries was more than 100%, even 200%, but why do we have to try to keep public debt at the level of 65%. The Government has calculated very carefully. It is true that the public debt ceiling is important but it is not everything.

The ability for debt payment is really important. Under international practices, the payment obligation of the State budget revenue at the level of 25% is very difficult. In fact, in 2015 the figure in Vietnam was 27%, including the direct debit and loan payment reaching the peak for 2016 -2017. Therefore, if the Government decides to increase the public debt ceiling, the pressure will be greater. So, in order to ensure the safety of public debt, we should control the debt ceiling not exceeding 65% of GDP, Government debt to be no more than 55% and foreign debt to be no more than 55% until 2020. This was also the determination of the Government, which was submitted to the National Assembly.

Specifically, in order to effectively use the loan, not increasing the public debt ceiling, how will we restructure public investment?

The restructure of public investment must be carried out to ensure fiscal sustainability and safety of public debt. Therefore, the State budget should focus on investing in essential issues and decrease the proportion of public investment in the total of social investment. In addition, investment efficiency must increase. That's two goals set out in the restructure of public investment in the near future.

Therefore, we need to implement solutions suitably and appropriately. We need to make every 5 year plan to tighten fiscal discipline. Also, we need to promote State savings and try to increase revenues for expenditure. The public debt must be in our capacity, but not increasing the public debt ceiling.

Budget expenditure is related to economic growth, but when economic growth is below the target set, the public debt ceiling will increase. How will we deal with this situation, Sir?

In fact, this year's deficit stays at a low level of 3.5%, which is not desired by Ministries, branches and localities in the field of capital investment.

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The Government has determined on controlling overspending under the figure approved by the National Assembly. If the budget deficit is still within the framework of the National Assembly’s decisions but economic growth cannot reach the target, there will be additional principles for this situation. Thus, when local authorities have low and reduced revenues, they must adjust expenditures. In addition, we need to strive to increase revenue including domestic revenues and tax collection on import and export activities. For import-export tax collection, we need to tighten the tax calculation. For domestic tax revenues, we should expand the tax base by raising the proportion of informal enterprises into formal enterprises, encouraging the establishment of new enterprises, and strengthening regulations on invoices or bills of non-state units.

By Minh Anh/ Hoang Anh