Debt repayment obligations increase as public debt could rise to VND3.1 trillion

According to the Government's report on public debt at the 4th session of the 14th National Assembly, public debt in 2017 is expected to increase to 3.1 million billion VND from over 2.8 million billion VND in 2016, equivalent to 62.6% of GDP.

Reporting to the National Assembly on behalf of the Government, Minister of Finance Dinh Tien Dung said that public debt in 2016 was 2.8 million billion VND (equal to 63.6% of GDP), of which government debt was 2.3 million billion VND (equal to 52.6% of GDP), government-guaranteed debt was 461 trillion VND (equal to 10.25% of GDP), and local government debt was 34 trillion VND (equal to 0.76% of GDP).

Regarding public debt structure, government debt accounts for 82.7%, government-guaranteed debt accounts for 16.1% and local government debt accounts for 1.2%.

Public debt continues to increase

The Minister of Finance assessed that public debt, government debt, and foreign debt of the country in 2016 continued to increase compared to the previous year and were close to the threshold allowed by the National Assembly.

Minister Dinh Tien Dung added that based on the 2017 public debt borrowing and repayment plan and the implementation status up to September 30, 2017, it is expected that by the end of 2017, public debt will be about 62.6% of GDP, government debt will be about 51.8% of GDP and the country's foreign debt will be about 45.2% of GDP, within the limits allowed by the National Assembly.

Thus, compared to 2016, public debt in 2017 may increase by about 300 trillion VND.

“Although public debt has increased in absolute numbers, it has decreased compared to GDP (from 63.6% of GDP in 2016 to 62.6% of GDP in 2017). Of which, government debt is about 51.8% of GDP and the country's foreign debt is about 45.2% of GDP, within the limit allowed by the National Assembly,” Minister Dinh Tien Dung analyzed.

According to the head of the national treasury, to control public debt, the Government has simultaneously implemented measures to strengthen strict management, ensuring public debt is at a safe level, including the policy of temporarily stopping consideration of granting guarantees for new projects.

For example, in 2016, the Government only provided a guarantee for one transmission line project with a total value of 170 million USD, a sharp decrease compared to 2015; strictly appraise projects registered to use loan capital, especially new loan projects,...

“The Government's debt repayment is strictly implemented and guaranteed on time, including the Government's direct debt obligations and repayment of re-lending loans, preventing overdue debt from affecting commitments, contributing to strengthening the national credit rating,” Minister Dinh Tien Dung further analyzed.

According to the National Assembly's Finance and Budget Committee, although public debt is expected to remain within the allowable limit by the end of 2018, the Government is determined to strictly review loans for re-lending and loan guarantees by the Government.

“It is necessary to strengthen debt management and supervision, ensuring public debt safety indicators in the context of an uncertain and unstable state budget picture,” the National Assembly's Finance and Budget Committee noted.

Specifically, the rate of GDP mobilization through taxes and fees into the state budget has decreased, the rate of domestic revenue increase is low, the budget deficit tends to increase, and the ability to repay principal debt of the central budget is still limited.

“These are indeed difficulties that need to be focused on overcoming in the coming years, ensuring the completion of the targets of the 5-year financial plan 2016-2020, especially not exceeding the public debt ceiling of 65% of GDP decided by the National Assembly,” the National Assembly’s Finance and Budget Committee noted.

Debt service obligations increase

In 2016, the Government's debt repayment obligation compared to state budget revenue was 14% of total state budget revenue and if debt restructuring was included, it was 20.6% of total state budget revenue (within the approved limit of not more than 25% compared to total state budget revenue).

However, the report also admitted that the above debt repayment ratio "is quite high and is on an increasing trend, putting pressure on the state budget's debt repayment resources".

For example, in 2016, the total debt repayment obligation of the Government was more than 250 trillion VND. In 2017, the debt repayment obligation of the Government was more than 260 trillion VND.

The Government's debt repayment in 2017 was strictly implemented, with debt repayment on time and in full in accordance with the Government's commitments to donors. In the first 9 months of this year, more than 213 trillion VND was repaid.

To control public debt well, the Government has also proposed a series of solutions. Specifically, it will continue to strictly manage capital mobilization for the state budget and for development investment, focusing on capital mobilization to offset the state budget deficit within the framework of budget balance and medium-term public investment for the period 2016-2020.

Notably, the Government affirmed its viewpoint of using loans for development investment, not for regular expenditure; strictly controlling loans for re-lending and government guarantees...

In addition, the Government will also strictly control the borrowing activities of enterprises (both medium-, long- and short-term) in the form of self-borrowing and self-repaying within the limits permitted by the Prime Minister in Decision No. 544/QD-TTg dated April 20, 2017 approving the Medium-Term Debt Management Program 2016-2018.

Specifically, the annual medium- and long-term commercial loan limit for enterprises is a maximum of 5.5 billion USD, and the maximum annual increase in short-term foreign debt is 8-10%.

According to Dan Viet Newspaper