Safe public debt, increasing the room for fiscal policy

	The Government requests increasing revenue collection by 3%, decreasing outstanding debts under 5%
	Abolish many legal documents in finance
	Mobilization rate for state budget from 2021 - 2025 targeted to reach 15-16% of GDP

The direct debt repayment obligation of the Government by 2020 is about 24.1% of state budget revenue.Photo: Internet

This contributes to increasing the room for fiscal policy, thereby helping Vietnam's economy to be supportive in adifficult context.

Public debt balance is 55.8%

According to Mr. Vo Huu Hien, Deputy Director of Department of Debt Management and External Finance, Ministry of Finance, based on the provisions of the Law on Public Debt Management 2017, in all stages of the debt management processpublic debt has been strictly controlled, from mobilizing and using loans, repaying debts, handling risks and implementing public debt management operations, creating positive changes, contributing to reducing public debt balance from the peak of63.7% of GDP in 2016 to 55.8% of GDP by the end of 2020. Government debt is about 49.6% of GDP.

At the same time, the growth of public debt is controlled, decreasing from the average of 18.1% / year in the 2011-2015 period to about 6.6% / year in 2020. The Government's direct debt repayment obligation will reach 22.4% of the total state budget revenue (State budget) in 2020, to maintain within the debt limits allowed by the National Assembly and ensure national financial security.

Notably, the repayment of government loans in recent years has been strictly implemented within the assigned estimates, ensuring they are on time, not letting overdue debts affect national economic commitments, contributing to strengthening the national credit rating.

The target of the Government's direct debt repayment obligation compared to the 2016 state budget revenue is 15.8%;in 2017, it was 19.7%;in 2018, it was 16.1% and in 2019, it was 17.4% (the prescribed limit is not more than 25%).

The Ministry of Finance has also drastically persisted in capital mobilization, disbursement of ODA loans and foreign concessional loans.For example, in 2020, the unit chaired negotiations of 34 agreements (five framework agreements and 29 specific loan agreements), signed 18 agreements (including five framework agreements and 13 loan agreements) withtotal value ofnearlyUS$1.2227 billion.

In 2020, the withdrawn ODA loans and foreign concessional loans are estimated atUS$2.150 billion (equivalent to about VND49,775 billion), of which about US$1.256 billion is allocated, loans on re-lending about US$894million.

The on-lending management and government guarantee control is strengthened through the implementation of signing 41 on-lending contracts, 19 sub-loan agreements with sub-borrowers, three amendments and supplements to contractson-lending; completed and prepared to sign another 12 on-lending contracts.

In particular, it has completed the comparison with 11 on-lending agencies and signed minutes to confirm the repayment schedule for each project to ensure the accuracy of the data system, as a premise for the task of building facilities for national data on public debt.

There is still psychological dependence

In addition to theachieved results, the public debt management task still faces difficulties, challenges and limitations, such as the debt portfolio still contains potential risks; concessional loans started to apply terms of quick repayment, ODA loans gradually decreased, leading to a shortage of preferential capital sources for development investment.The Government's direct debt repayment obligation tends to increase; Government bond tenors are not diversified; debt management by local governments is still limited; and national foreign debt management remains difficult.

That is not to mention the responsibility of some ministries, branches, localities and project owners in handling common work is not high, synchronous, delayed and problematic, concentrated in stages such as preparation of projects, site clearance, reciprocal capital, assignment and allocation of estimates, completion of disbursement documents leading to slow disbursement.

Apart from objective reasons, there are also subjective reasons such as changes in institutions and policies, and the functions of public debt management are not yet unified;the organization of the debt management apparatus has not been unified from the central to local levels; and the use of loans still relies on the State.

The organizational structure of a number of ministries and agencies concerned with state management of public debt and aid hasoverlaps.

The year 2021 is of particular importance as it is the first year of implementing the 5-year socio-economic development plan in 2021-2025 and the 10-year socio-economic development strategy 2021-2030.

According to Mr. Hien, in order for public debt management to continue to achieve the set goals, the Ministry of Finance will review and complete mechanisms, policies, processes, procedures and regulations that hinder development to collecteffectively absorb resources (loans and grants) for development and ensure safety of public debt.

In addition, it will continue to improve and submit public debt management tools to competent authorities such as the 10-year public debt strategy for the 2021-2030 period; 5-year public loan and debt repayment plan for the 2021-2025 period;the 3-year public debt management program and annual plans, limits for borrowing and repayment of public debt in accordance with the law on public debt management in parallel with the task of mobilizing loans under the Resolution of the National Assembly, the Government and plans and limits on public borrowing and debt repayment have been approved by the Prime Minister.Focus on solving problems in order to promote disbursement of loans and grants.