Law on Public Debt Management: Institutional consultation should be parallel with the enhancement of implementation ability

Mr. Truong Hung Long- Director of the Department of Debt Management and External Finance, Ministry of Finance speeches at the opening.

The workshop was attended by representatives of the supervisory bodies of the National Assembly; agencies such as the Government Office, the Ministry of Finance, the Ministry of Planning and Investment, the State Bank; agencies, units using public debt, re-lending agencies and many economic and financial specialists.

There will be seven Decrees guiding the Law

Speaking at the opening ceremony, Mr. Truong Hung Long, Head of the Debt Management and External Finance Department of the Ministry of Finance, said that the Law on Public Debt Management No.20/ 2017/ QH14 was approved by the National Assembly on November 23, 2017 at the fourth session of the 14th National Assembly was a step in the reform in the management of public debt. The promulgation of the Law on Public Debt Management replaces the Law on Public Debt Management in 2009.

This Law is to create a legal framework in accordance with the provisions of the Constitution 2013, consistent with the provisions of the Law on finance and investment budget newly issued; overcoming the shortcomings and limitations after more than 8 years of implementation of the Law on Public Debt Management such as the problems related to the re-lending of Government's foreign loan, the issuance and management of Government guarantee, loans of local governments; risk management; statistics, accounting, public debt monitoring and supervision, raising and tying accountability to the functions and tasks of public debt management of the concerned agencies.

In addition, the promulgation of the Law also meets the requirements of sustainable, safe and effective debt management in line with the country's socio-economic development conditions in the new period, especially when Vietnam has become a middle-income country, the ODA capital in the coming time will be gradually reduced and ended, replaced by loans with conditions which is close to the market conditions.

In order to guide the Law on Public Debt Management, the Prime Minister assigned the Ministry of Finance to develop the drafting of six decrees, detailing the contents of public debt management; Government bonds; re-lending of foreign loans of the Government, granting and managing the Government's guarantee; managing the cumulative fund management and debt repayment; debt management by local government. The Ministry of Planning and Investment will chair to develop one Decree relating to the management of ODA capital and preferential loans.

So far, the Ministry of Finance has cooperated with the Drafting Board to draft the content of the Decrees, submitted to the Ministries, branches, localities and relevant agencies. Draft Decrees have also been posted on the Government and Ministry of Finance portal for collecting public comments.

During the drafting process of the Decrees, the Ministry of Finance also consulted with international experts from the World Bank, ADB, the International Monetary Fund (IMF) and independent experts in the country with good experience in public debt management. The Ministry of Finance also held a seminar on the issuance of government bonds and debt management by local authorities.

Mr. Long also said that this workshop, the Ministry of Finance coordinated with ADB to consult for 4 draft decrees related to public debt management; the use and management of the Retention Fund for Cumulative Debt; the issuance and management of the Government's guarantee; the re-lending of official development assistance (ODA) capital and foreign preferential loans of the Government.

A view of the workshop

Improve the ability to minimize risk

As a partner, Mr. Aaron Batten, senior economist at ADB, said: "This event shows the deep involvement of all parties in the policy-making process of the Government”.

According to the ADB's representative, over the past time, the Government has had many solutions to change the process of public debt management in Vietnam in the direction of strengthening the management role, especially in building the system of the Government to enhance transparency. It is clear that localities are also playing an increasingly important role in re-lending and repayment, ensuring the sustainability of their debt, and enhancing their relationships with international partners.

That is a strong ambition for innovation of the Vietnamese Government - said Aaron Batten. ADB hopes to fully support the Government of Vietnam in implementing these innovations.

Regarding the Law on Public Debt Management, ADB said that the progress of implementation guidance documents is being ensured quite well. However, there are still many challenges to be solved. For example: How to better manage your debts, how to look at these issues in the Medium Term Debt Management Program, how to organize your debt management better or how to define roles and responsibilities of government agencies more clearly... These are the things we need to discuss in this period.

Moreover, ADB said that the process of developing guidelines was also an opportunity to raise ability for the agencies involved in the implementation of the law. Governments cannot ensure that relevant agencies as well as localities are competent to absorb new regulations. Thus, in order to reduce the risk, it is necessary to combine the consultation process with the ability raising activities for the parties involved. ADB committed to support units in training activities for staffs of the Ministry of Finance and other relevant agencies.

The workshop is scheduled to take place on 22 and 23 March, 2018 to discuss the content of four drafts including the decree on public debt management, the decree on issuance and management of government guarantees; the decree on management of re-lending of ODA loans, foreign preferential loans; the decree on the management and use of the fund for debt accumulation.