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Mr. Nguyen Huu Quang appreciates the medium-term financial plan. Photo: Thai Binh.

It is controversial whether the Government should build the medium-term financial plan or not. What do you think about this?

2016 is the first year we have implemented the Budget Law (2015). The Law has many new features, including the construction of the first medium-term financial plan for 5 years (2016-2020).

Thus, the construction of the medium-term financial plan is firstly to comply with the provisions of the Budget Law.

In my opinion, the introduction of the medium-term financial plan is an innovation in a positive direction.

Because when we propose the maximum expenditure, Ministries and localities will carry out financial activities appropriately on the basis of the ceiling budget for expenditure.

Regarding public debt, the Government is determined not to increase the public debt ceiling, but some delegates of the National Assembly have proposed to increase the ceiling of the Government’s debt (to 55% of GDP) for the Government to easily and flexibly manage macroeconomic operations?

Public debt is the necessary resource to promote the development of many countries. The matter is how to use public debt effectively.

In fact, many countries with high public debt such as Japan (200%), the US (over 100%) are safe but some countries with lower public debt still face a financial crisis such as Greece and Spain. It is due to the effectiveness of growth.

In Vietnam, GDP increases thanks to capital and cheap labor, while other factors, especially total factor productivity (TFP) contributes to the budget at a very low level. That's why we should reform the model of economic growth.

Regarding the ceiling of the Government’s debt, in order to reduce the burden of debt for the Government, the Budget Law (2015) should allow local authorities to invest on the basis of budget revenues.

In the context of the public debt and the Government’s debt ceiling remaining unchanged, the Government should create favourable conditions for localities to receive loans for investment, therefore, the Government’s debt may be reduced.

When localities actively receive loans, they will be more responsible for the payment.

Regarding the public debt ceiling, according to the report of the Government, if GDP reaches 5.1 million billion vnd as expected, the public debt will be 63% of GDP. However, the Government has adjusted the forecast of GDP to only 4.6 million billion vnd, Thus, the current public debt is approaching the ceiling. To keep the public debt under the ceiling, the Government should enhance the quality of economic growth and restructure the budget revenues and expenditures. Therefore, the Government may raise the mobilization of GDP into the national budget.

There is a cause that the public debt is increasing due to the lower GDP growth as expected. What do you think about this?

This issue is an extremely difficult problem for the Government in the process of operating the economy. Because we always strive for a high level of GDP growth, it causes many problems.

In fact, when GDP is high, other indicators related to GDP are also high. For example, the proportion of the budget for investment must be high, accordingly.

Thus, everyone wants much more investment and investors desire more projects. The State agency for allocation and approval of investment projects also expects GDP growth at a high level to have a higher investment spending. However, financial agencies worry about overspending.

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Of course, in the context of promoting the development of the country, it is a positive sign if we have many projects, but in fact, some of projects are not really effective to invest. This is a problem that the Government needs to overcome.

Thank you!