Good management of public debt creates room to implement expansionary fiscal policy

VCN - Public debt safety indicators continue to be strictly controlled in the safe limit. With a lower debt level than the current ceiling rate, and a favorable debt structure, Vietnam has a lot of room to implement expansionary fiscal policy to allocate loans for large projects as an economic growth engine.
Monetary policy must prioritize inflation control Monetary policy must prioritize inflation control
Public debt safety index within warning threshold Public debt safety index within warning threshold
Vietnam’s public debt management on right track: Ministry Vietnam’s public debt management on right track: Ministry
Long Thanh Airport Project. Illustrative Photo: Vietnam+
Long Thanh Airport Project. Illustrative Photo: Vietnam+

Bright spots in fiscal policy and macro policy management

In the context of the economy facing many external risks and challenges, including problems beyond forecasting that have had a negative impact and severe impact on the economy, the public debt safety indicators continue to be strictly controlled, within the debt ceiling approved by the National Assembly, contributing to building fiscal policy space.

The Ministry of Finance said that public debt safety indicators continue to be strictly controlled, within the debt ceiling approved by the National Assembly, and the effectiveness of public debt and government debt management continues to be maintained. By the end of 2023, outstanding public debt accounted for about 36.6% of GDP, outstanding Government debt 33.8% of GDP, and the Government's direct debt repayment obligation about 18.8% of state budget revenue.

According to assessments, the results of public debt management are a bright spot in fiscal and macro poly management. Vietnam's public debt is assessed by credit rating agencies and international organizations as sustainable and creates space to implement reasonable, expansionary fiscal policy when necessary, especially during severe outbreak of the Covid-19 pandemic.

“If in 2021, public debt is at 43.1% of GDP, by the beginning of 2024 public debt will fall to 37% of GDP, especially foreign debt will be 34% of GDP, while the debt target assigned by the National Assembly is 60% of GDP. This means that we still have great room to mobilize public loans to serve essential infrastructure projects and constructive infrastructure projects for future development. But those projects must promote the highest efficiency and contribute to the economic growth to the maximum extent. Our point of view is to only borrow when we can repay the debt and only borrow when we carry out the most effective works and projects to bring a breakthrough to the country's economic development", Minister of Finance Ho Duc Phoc emphasized.

In addition to strict control of debt safety indicators within the limits approved by the National Assembly, debt restructuring activities have also been actively implemented. Accordingly, outstanding domestic debt increased, accounting for about 71% of outstanding Government debt, contributing to minimizing exchange rate risks. Up to now, domestic debt is mainly long-tern Government bonds, minimizing the risk of refinancing.

The expected average term of Government bonds in 2023 is about 12.4-12.5 years, ensuring the loan term target of 9-11 years according to National Assembly Resolution No.23/2021/QH15 on the 5-year public debt repayment and borrowing plan for the 2021-2025. During the past year, interest rates for Government bond issuance were carefully managed, ensuring harmony with monetary policy management. Specifically, the average interest rate of the entire Government bond portfolio is expected to be about 3.3%/year in 2023, down 0.18 percentage points compared to 2022 in the context that global interest rates still maintain upward trend. Along with foreign debt gradually decreasing in the Government's loan structure, the current foreign debt portfolio is still mainly long-term loans with preferential interest rates. This contributes to increasing debt sustainability in the face of exchange rate fluctuations in strong foreign currencies globally.

Vietnam's credit rating is assessed positive

Credit rating organizations have all had positive assessments of Vietnam's credit rating. This is all marked by the results of fiscal consolidation and public debt control. Along with the synchronous implementation of public debt management solutions, the Ministry of Finance has also actively accelerated communication to investors, effectively implemented national credit ratings, contributing to reducing Government loan mobilization costs according to the roadmap to improve national credit ratings until 2030.

According to Ms. Nguyen Xuan Thao, Deputy Director of the Department of Debt Management and External Finance (Ministry of Finance), all three credit rating organizations (Moody's, S&P and Fitch) have positive comments on Vietnam’s macro economy, highly appreciate the efforts of the Vietnamese Government in operating activities, focusing on sustainable economic growth. Outstanding points of the economy recognized by rating organizations include: continuing to attract abundant FDI; effective import and export activities; public debt reduction. The fact that the national credit rating assessed positive is a bright spot, affirming the confidence of credit rating agencies in the recovery and growth prospects of Vietnam's economy in the medium term, contributing to promoting the country's image and continuing to attract international investors to Vietnam.

The upgrade of Vietnam's credit rating is a bright spot to be recognized, demonstrating the international community's appreciation for Vietnam's efforts in credit rating as well as Government's direction and management on macroeconomics, finance, public debt, banking, and currency. The credit rating upgrade will have a positive impact on the entire economy and contribute to facilitating Vietnam in mobilizing capital to promote economic development at appropriate costs and risks.

By Hoai Anh/ Huyen Trang

Related News

Banks actively sell secured assets but still find it difficult to "close orders"

Banks actively sell secured assets but still find it difficult to "close orders"

VCN - A problem that has been reflected in the past few years is the "sluggish" banks' ability to sell mortgaged assets to handle bad debts, whether real estate, machinery, cars, or even gold.
Recovery underway, businesses need to accelerate credit

Recovery underway, businesses need to accelerate credit

VCN - In recent directives, the monetary policy regulatory body continues to urge banks to implement practical and effective solutions to strive for credit growth across the system, aiming for a 5-6% increase by the end of Q2 2024.
With the recovery momentum returning, businesses need to speed up credit

With the recovery momentum returning, businesses need to speed up credit

VCN - In recent instructions, the monetary policy regulator continues to urge banks to implement practical and effective solutions to strive for system-wide credit growth, which will be 5-6% by the end of the second quarter of 2024.
Fiscal policy achieves many positive results

Fiscal policy achieves many positive results

VCN – In the context of a rapidly changing and unpredictable situation, Associate Professor, PhD. Tran Hoang Ngan, member of the National Assembly's Economic Committee, a representative of the HCM City National Assembly, said that it is necessary to implement urgent and fundamental solutions for the economy to adapt and develop, in which fiscal policy has ensured support for people and businesses.

Latest News

Central bank works to raise interbank rates and ease forex market

Central bank works to raise interbank rates and ease forex market

The State Bank of Vietnam (SBV) has shortened terms and kept the interest rate of its bills unchanged to increase the attractiveness of the bill channel, which will help raise the interbank interest rates and reduce pressure on the USD/VND exchange rate.
Interest rate fluctuations in the world affect Vietnam

Interest rate fluctuations in the world affect Vietnam's exports

VCN - According to experts, the recent interest rate cuts by the European Central Bank (ECB) and the Bank of Canada (BoC) are important moves that signal a broader trend of monetary easing among major central banks. This is likely to affect Vietnam's exports.
Ensure stability and prevent fluctuation in price levels

Ensure stability and prevent fluctuation in price levels

VCN – In the coming time, it is predicted that there will be a lot of pressure on price management, such as increasing the base salary, implementing a price adjustment roadmap for state-managed goods... so the Government has directed agencies to strengthen price management measures.
Proposal for using over VND18,200 billion of public investment provision for 14 projects

Proposal for using over VND18,200 billion of public investment provision for 14 projects

VCN - The Government submitted to the National Assembly for permission to use VND 18,220 billion in provisions from the central budget of the Medium-term Public Investment Plan 2021-2025 for 14 public investment projects.

More News

Ensuring safety for a cashless society

Ensuring safety for a cashless society

VCN - As the rapid increase in online fraud in the field of non-cash payments, many new solutions are being thoroughly deployed by agencies, units, banks and businesses to ensure user safety and promote the development of non-cash payments.
Green credit needs to be unblocked

Green credit needs to be unblocked

VCN - The demand for green credit in the economy is very high, but there are still many "gaps" that need to be filled for banks to be more confident in providing green financing to businesses and for businesses to have more opportunities to access this capital.
MoF publishes disbursement key projects in the Transport sector

MoF publishes disbursement key projects in the Transport sector

VCN – The Ministry of Finance (MoF) has sent an official dispatch to the Ministry of Transport and the People's Committees of provinces and centrally run cities on the disbursement of key national works and projects and in the Transport sector, locally managed inter-regional transport projects, river and sea erosion projects using the central budget reserve capital in 2023.
There should be no loss or waste in arranging public investment from reserve sources

There should be no loss or waste in arranging public investment from reserve sources

VCN - Discussing at the conference hall on the use of medium-term public investment provisions for public investment projects in the meeting on June 27, National Assembly delegates basically agreed and requested the Government to urgently complete procedures, capital allocation, avoiding spreading and wasting.
Vietnam hopes to have a breakthrough in investment from Japanese ODA capital

Vietnam hopes to have a breakthrough in investment from Japanese ODA capital

VCN - On June 26, Minister Ho Duc Phoc had a meeting with Mr. Ito Naoki, Ambassador Extraordinary and Plenipotentiary of Japan to Vietnam. Speaking at the reception, the Minister said that Vietnam wanted to have a breakthrough in the process of investing ODA capital, focusing on large national projects.
Biometric authentication to play role in bank scam fight

Biometric authentication to play role in bank scam fight

It is an urgent need to strengthen security for online transactions amidst burgeoning cashless payments, an official from the central bank has said, referring to biometric authentication to be mandatory from July 1.
Policy on security in online banking service provision drafted

Policy on security in online banking service provision drafted

The State Bank of Vietnam (SBV) has finalised a draft circular on safety and security in providing online services in the banking industry.
Vietnam made good progress in reforming public financial management

Vietnam made good progress in reforming public financial management

VCN - Vietnam has made many efforts to reform public financial management in the past 10 years and has made comprehensive progress. This is the opinion of Deputy Minister of Finance Bui Van Khang at the Conference to announce Public Expenditure and Financial Accountability (PEFA) organized by the Ministry of Finance on the morning of June 24.
Banks are lifting deposit rates

Banks are lifting deposit rates

Private commercial banks have been lifting their deposit rates this month to attract capital and notably, some of them have increased their rates more than twice.
Read More

Your care

Latest Most read
Central bank works to raise interbank rates and ease forex market

Central bank works to raise interbank rates and ease forex market

The State Bank of Vietnam (SBV) has shortened terms and kept the interest rate of its bills unchanged to increase the attractiveness of the bill channel, which will help raise the interbank interest rates and reduce pressure on the USD/VND exchange rate.
Interest rate fluctuations in the world affect Vietnam

Interest rate fluctuations in the world affect Vietnam's exports

The recent interest rate cuts by the European Central Bank (ECB) and the Bank of Canada (BoC) are important moves that signal a broader trend of monetary easing among major central banks.
Ensure stability and prevent fluctuation in price levels

Ensure stability and prevent fluctuation in price levels

VCN - On June 22, Prime Minister Pham Minh Chinh signed and issued Official Telegram No. 61/CD-TTg sending to Ministers, Heads of ministerial-level agencies, and agencies under the Government; Chairman of People's Committees of provinces and centrally run
Proposal for using over VND18,200 billion of public investment provision for 14 projects

Proposal for using over VND18,200 billion of public investment provision for 14 projects

The Government submitted to the National Assembly for permission to use VND 18,220 billion in provisions from the central budget of the Medium-term Public Investment Plan 2021-2025 for 14 projects.
Ensuring safety for a cashless society

Ensuring safety for a cashless society

VCN - As the rapid increase in online fraud in the field of non-cash payments, many new solutions are being thoroughly deployed by agencies, units, banks and businesses to ensure user safety and promote the development of non-cash payments.
Mobile Version