Monitor to prevent public debt from exceeding the ceiling of 65%

It is expected that the public debt level in 2016 will reach 64%, but the Government and the National Assembly will monitor to ensure that it does not exceed the ceiling of 65%.

Reporting on the implementation of the socio-economic development plan in the first 6 months of the year, especially the solutions for the last 6 months of 2016, the Government forecasts that the domestic economic situation will continue to face difficulties and challenges. Therefore, the economic growth in 2016 will hardly reach the target set by the National Assembly of 6.7%.

Public debt and government debt are forecast to exceed the allowable ceiling by the end of 2016. (Illustration: KT)

The government said that although in 2015, the economy was in a fairly clear recovery phase, GDP increased rapidly after each quarter and in the fourth quarter increased by 7.01%. However, in 2016, the world and domestic economic situation developed complicatedly, many unforeseen adverse factors arose, and GDP growth in the first 6 months showed signs of slowing down.

Specifically, in the first quarter of 2016, GDP increased by only 5.48%, 1.53 percentage points lower than the growth rate of the fourth quarter of 2015; the second quarter increased higher than the previous quarter but only increased by 5.55%; in the first 6 months, GDP increased by 5.52%, much lower than the growth rate of the same period in 2015 of 6.47%.

According to the Government's assessment, the economic growth slowdown will affect the targets of state budget deficit over GDP, which will be higher than the level set by the National Assembly; public debt and government debt are forecasted to exceed the allowable ceiling by the end of 2016.

Previously, according to ADB's forecast, Vietnam could achieve a GDP growth rate of 6.7% this year. At the same time, in June 2016, the World Bank (WB) also said that Vietnam and the Philippines are two countries with high growth rates, which will contribute to offsetting the slowing growth of countries in the region.

However, in a recent press conference to review and update Vietnam's economic development, the World Bank forecast Vietnam's GDP growth for the whole year of 2016 at 6.0%. This is the second consecutive time that the WB has lowered its forecast for Vietnam's economic growth this year.

Mr. Sebastian Eckardt, senior economist of the World Bank, also commented: “The fiscal imbalance that has accumulated over many years is also a concern. The budget deficit was estimated at nearly 6.5% of GDP at the end of 2015. Vietnam's public debt accounted for about 62.2% of GDP and is rapidly approaching the ceiling of 65% of GDP. Preliminary results on budget revenue and expenditure in the first 6 months of the year show that budget pressure will continue.”

By the end of 2015, Vietnam's public debt had reached 62.2% of GDP, of which government debt was up to 50.3%, exceeding the allowable ceiling. In absolute terms, public debt had increased to VND2.6 quadrillion, equivalent to USD117 billion, double the level in 2011.

“The government must not let public debt exceed the limit”

Government calculations show that to achieve the economic growth target set by the National Assembly of 6.7%, GDP growth in the last 6 months of the year must reach 7.6%, more than 2 percentage points higher than in the first 6 months of the year.

Assessing the Government's assessment, Delegate Tran Hoang Ngan (National Assembly Delegate of Ho Chi Minh City) said that our country's GDP in the first 6 months of the year only reached 5.52%, lower than the same period (6.3%) and it is very difficult to achieve the growth target of 6.7%.

However, according to Mr. Ngan, even the WB's forecast looks at both medium and long-term prospects and sees Vietnam's growth will be higher than in 2016 in 2017. The WB sees that Vietnam's future is on the right track, the problem is that Vietnam must continue to be confident in that direction.

According to Delegate Tran Hoang Ngan, one of those directions is that Vietnam is reforming its administration and improving its investment and business environment. In the first 6 months of the year, many new businesses have registered to operate as well as many previously stagnant businesses have registered to operate again, which is a good sign for the future.

Moreover, since the beginning of the year, the Government and its members have met and committed to businesses on administrative reform and committed to improving the investment and business environment, and that confidence factor will help improve in the medium term. Therefore, although it is difficult to achieve the set target this year, it is still possible to accept a low level to achieve the target of sustainable growth in the following years better.

“As we know, the state budget deficit is expected to be around 5% this year, but we must be determined to do so. If GDP decreases, the relative GDP deficit will not reach the set target and will affect the ceiling limit. But the Government and the National Assembly will monitor this so that it does not exceed the ceiling allowed by the National Assembly, which is expected to be 64%,” said Delegate Tran Hoang Ngan.

According to Delegate Tran Hoang Ngan, what the National Assembly needs to agree on and resolve most strongly right now is that once that limit has been set, the Government is not allowed to exceed this limit.

“The National Assembly closely monitors and Government members must be aware that when it comes to this, all spending must stop. We must be strong in deciding the level of state budget spending. I am also confident that the deficit will be within limits and will not exceed 65% of GDP,” said Delegate Tran Hoang Ngan./.

According to VOV