Members of Parliament: No ODA loans for recurrent expenditures.

This morning, October 30th, the National Assembly discussed the socio-economic situation in 2014 and the tasks for 2015. On the sidelines of the National Assembly, the majority of National Assembly deputies expressed their agreement with the contents of the Government's report, while also drawing the Government's attention to issues of public debt, bad debt, restructuring, and the use of ODA loans.

Delegate Le Thi Nga - Thai Nguyen delegation. Source: VNA

Ms. Le Thi Nga, Vice Chair of the National Assembly's Judicial Committee (representative from Thai Nguyen province): A law on the management and use of ODA funds needs to be enacted.

To limit public debt, the first principle is to avoid borrowing ODA for recurrent expenditures. Over the past 20 years, we have attracted $78 billion, averaging over $3 billion per year. The government has made great efforts to channel this capital into socio-economic development, and many public projects have been built using this funding. However, in reality, many shortcomings have arisen, leading to losses, waste, and corruption in many ODA projects, significantly affecting the quality of construction and damaging Vietnam's reputation with donors.

Several major cases have occurred, but these were discovered by foreign parties. Large-scale violations are primarily uncovered by foreign entities. We also highly commend the prompt handling of the recent JTC railway case by the Minister of Transport, the Ministry of Public Security, and the Supreme People's Procuratorate. This demonstrates the serious stance and attitude of the Vietnamese government in addressing ODA violations.

The policy on using ODA funds has been adjusted; however, the regulations remain largely principled and do not prevent favoritism. Notably, the legal framework for ODA has revealed two shortcomings: the National Assembly – which bears the highest responsibility for public debt – and the taxpayers, who pay taxes, are almost completely uninvolved in ODA matters. I propose that the National Assembly enact a law governing the management and use of ODA funds, ensuring transparency in all funds and projects.

Any country that relies on ODA for the long term will fail. Currently, our ODA allocation is scattered, lacks focus, and fails to stimulate domestic resources, creating a mentality of dependence and reliance.

World experience shows that they always use ODA selectively. Governments only borrow for infrastructure investment and poverty reduction, not for small-scale projects, much less mega-projects, and they also plan to end ODA borrowing in the not-too-distant future.

We propose that the National Assembly exercise supreme oversight and enact laws on ODA, controlling its use, preventing waste, ensuring selective use, and simultaneously limiting and eventually ending ODA in the not-too-distant future.

Mr. Tran Du Lich (Deputy Head of the Ho Chi Minh City National Assembly Delegation): There needs to be transparency regarding how investment spending and recurrent spending are determined.

Regarding ODA loans, I agree with other delegates that ODA cannot be used for recurrent expenditures, but Vietnam's concept of investment and recurrent expenditures needs to be reviewed. We build office buildings, incur investment and consumption costs, while investing in education is called recurrent expenditure, thus the principle of efficiency is not high. Investment expenditures, including physical infrastructure and education, should be considered investments. There needs to be transparency regarding what constitutes investment and what constitutes recurrent expenditure.

Delegate Tran Du Lich - Ho Chi Minh City delegation. Photo: VNA

Regarding domestic debt, in my opinion, there's nothing wrong with it for both businesses and the state. If debt repayment is done effectively and profitably, especially if cash flow calculations are made and efforts are made to resolve the issue, then borrowing is not a bad thing. In our country's economic conditions, if we only accumulate capital for investment without borrowing, it will not be effective.

Our problem is the inefficient use of debt, excessive investment outside our core business, and we are currently facing an alarming situation where our annual debt repayments are reaching a critical level. We are now having to borrow to refinance existing debt, and this is a problem that needs careful consideration.

It is important to note that how debt is used, as well as economic strength and efficiency, are crucial considerations.

Representative Dang Thuan Phong (Ben Tre): The restructuring process is still slow.

I agree with the government's report, but I'm not entirely reassured by the slow pace of economic recovery and restructuring compared to development requirements; the failure to achieve the desired results in the three strategic breakthroughs; the weak capacity of the economy to absorb capital; the significant pressure on employment; and the real challenges posed by natural disasters and crime…

In my opinion, the government needs to focus on addressing the following shortcomings in 2015: public debt, current expenditures, development investment expenditures, debt repayment, etc.

Regarding bad debts and bad debt management: After more than a year of operation, the Vietnam Asset Management Company (VAMC) has purchased 95,000 billion VND; banks have also independently set aside 78,000 billion VND to handle bad debts. This is a significant effort by the banking system to concentrate its resources on handling bad debts, which is commendable.

However, the bottlenecks are the lack of resources, insufficient budgetary support, and the lack of the necessary legal framework for buying and selling non-performing loans. The government should address these two key issues in resolving non-performing loans.

Furthermore, the government needs to clearly define which sectors require controlling stakes to increase investment, and which sectors do not require controlling stakes and therefore do not need investment; they can be sold to generate national resources. This will prevent the reporting of losses that gradually deplete state capital. State capital management agencies have a responsibility in this matter and should provide more accurate advice to the government.

According to Vietnam+