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 with the problem of promoting credit growth

Banks with the problem of promoting credit growth

VCN - It is estimated that by the end of June 2024, the economy's credit growth will reach nearly 4.5%. This number is still far from the yearly credit growth target of 14-15%.
Managing fiscal policy has achieved many positive and comprehensive results

Managing fiscal policy has achieved many positive and comprehensive results

VCN - On July 15, the Ministry of Finance held an online conference to summarize state budget financial work in the first 6 months of the year, implementing tasks in the last 6 months of 2024. Minister of Finance Ho Duc Phoc attended and directed the conference. Also attending the Conference were Deputy Ministers of Finance, leaders of units under the Ministry of Finance.
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.

Latest News

Perfecting the legal framework to promote upgrading the stock market

Perfecting the legal framework to promote upgrading the stock market

VCN - After receiving comments from affected subjects including organizations, individuals, and market members, the State Securities Commission has just completed a draft circular amending 4 circulars regulating: stock trading on the stock exchange system; clearing and settlement of stock exchanges; operations of securities companies and information disclosure on the stock market.
Margin loan continues hit new record

Margin loan continues hit new record

VCN - The need to use leverage in the stock market is still very high, shown by the level of outstanding loans at securities companies continuing to increase sharply in the second quarter of 2024.
Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political tasks assigned to central and local agencies.

More News

The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will accelerate in the second half of 2024.
Prioritize resources and promptly supplement capital for policy credit

Prioritize resources and promptly supplement capital for policy credit

VCN- In the near future, to further promote the effectiveness of policy credit, the Ministry of Finance will continue to preside over and coordinate with relevant ministries, branches and the Vietnam Bank for Social Policies (VBSP) to implement many key solutions.
Measures suggested to boost startups’ access to capital

Measures suggested to boost startups’ access to capital

The recent vigorous growth of startups in Vietnam has attracted domestic and foreign investors, but insiders recommended more efforts be made to facilitate startups’ access to funding from investors so that they can live up to potential.
Inflationary pressure seen from monetary policy

Inflationary pressure seen from monetary policy

VCN - The economy went through the first half of the year, inflation is still under control and forecast to reach the target set by the National Assembly and the Government. However, variables from the currency market such as exchange rates, interest rates, credit..., even gold prices, are issues that need to be paid attention.
Proposal to increase Special Consumption Tax on tobacco products

Proposal to increase Special Consumption Tax on tobacco products

VCN - At the workshop Special Consumption Tax on cigarettes held by Vietnam Tax Consulting Association and the Institute of Financial Strategy and Policy on July 16, experts and businesses clarified the goals and content of amended the special consumption tax policy on tobacco products. According to experts, there cannot be a solution that fully ensures the benefits of both consumers, the state and businesses, but it is necessary to choose the most optimal option to achieve the initially set goals.
Savings of individual customers at banks hit record high

Savings of individual customers at banks hit record high

In spite of low interest rates, figures from the State Bank of Vietnam (SBV) released this week show deposits of individual customers increased by more than VNĐ39.7 trillion in April, to reach more than VNĐ6.7 quadrillion.
Determine tools, policy for inflation control

Determine tools, policy for inflation control

VCN - According to economic expert Associate Professor, PhD. Ngo Tri Long (photo), former Director of the Price Market Research Institute (Ministry of Finance), inflation is an issue that needs special attention, especially related to the management of monetary policy, interest rates, increasing prices of goods and services...
The impact of wage increases on inflation will not be too significant

The impact of wage increases on inflation will not be too significant

VCN - Addressing concerns related to wage and price increases, Dr. Nguyen Duc Do, Vice Director of the Institute of Economics - Finance (Finance Academy), believes there are not many factors causing sudden price surges in the last 6 months of 2024. Therefore, it can be expected that the rate of price increases in the last 6 months will be comparable to that in the first 6 months of 2024.
Imposing and raising special consumption tax contributing to change consumption behavior

Imposing and raising special consumption tax contributing to change consumption behavior

VCN - At the Workshop on Comments on Completing the Revised Law on Special Consumption Tax (SCT) organized by the Vietnam Confederation of Commerce and Industry (VCCI) on July 11, many experts and businesses contributed their opinions to clarify the importance and impact of the revised special consumption tax law, which emphasizes the addition of taxable areas or tax increases to change society's consumption behavior.
Read More

Your care

Latest Most read
Perfecting the legal framework to promote upgrading the stock market

Perfecting the legal framework to promote upgrading the stock market

State Securities Commission has completed a draft circular amending 4 circulars regulating: stock trading on the system; clearing and settlement; operations of securities companies and information disclosure.
Margin loan continues hit new record

Margin loan continues hit new record

The need to use leverage in the stock market is still very high, shown by the level of outstanding loans at securities companies continuing to increase sharply in the second quarter of 2024.
Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs comprehensive regulatory framework to attract green financing

Vietnam needs a clear regulatory framework and solutions to promote the green finance market and encourage private capital flows into green fields, experts have said.
2025 budget estimation must be practical, accurate and efficient

2025 budget estimation must be practical, accurate and efficient

VCN - Directing the 2025 state budget estimation, Minister of Finance Ho Duc Phoc emphasized that units must ensure that the 2025 budget estimation must be practical, accurate, efficient, and meet the requirements for performing professional and political
The corporate bond market will be more vibrant in the second half of the year

The corporate bond market will be more vibrant in the second half of the year

VCN - In the first half of 2024, with bond maturity pressure continuing to increase, corporate bond issuance has shown many positive signs compared to the previous year. According to forecasts, businesses' need to borrow and issue corporate bonds will acc
Mobile Version