Deputy Prime Minister Vuong Dinh Hue: 'Absolutely do not leave debt for future generations to bear!'

Deputy Prime Minister Vuong Dinh Hue, a National Assembly delegate from Ha Tinh province, emphasized this when answering the press in the hallway of the National Assembly on October 22.

Deputy Prime Minister Vuong Dinh Hue.

Sir, in the context of low GDP growth and the scale of 220 billion USD that the Government has proposed to mobilize for restructuring is not small (10.5 million billion VND, equivalent to 480 billion USD), is this feasible?

Just multiply the total social mobilization by about 30% of GDP to get the number. Each year, the GDP scale is 220 billion USD, how much will it be in 5 years? Then calculate 30% of that number to get the number of resource mobilization.

In the previous restructuring plan, the Government did not give specific numbers like this time. This time, we were able to determine the figures thanks to the forecast orientation. We were able to set the orientation because we followed the Law on Public Investment and the Law on State Budget, had a 5-year medium-term financial plan, and a medium-term public investment plan. From there, we had the conditions to balance the whole thing better, whereas before we only did it yearly.

There have been cases of public investment projects running out of budget compared to the original estimate. So has the Government anticipated this situation this time?

After the Prime Minister's Directive No. 1792 on strengthening investment management from the State budget and Government bond capital, the State, including the central and local levels, is only responsible for the approved capital. Whoever increases the capital, whoever decides to invest, is responsible. The Government has strictly followed the rules and tightened the budget. This time, we must tighten the budget discipline.

There are opinions that the Government proposes to loosen the public debt ceiling to create new room for investment and development, sir?

The issue of loosening or not loosening the public debt ceiling has been discussed quite a lot among both managers and experts according to the general principle: The family is poor, the country is in difficulty and has no food or savings, so it must borrow to develop.

Many people also ask why developed countries with public debt of more than 100%, even 200% like Japan, but we still keep it at 65%. The Government has carefully calculated this. It is true that setting a public debt ceiling is important but it is not everything. The ability to repay debt is important. According to international practice, the ratio of debt repayment obligations of the State budget to State budget revenue is 25%, which is very difficult.

In fact, in 2015, this ratio in Vietnam was 27.5%, including the direct debt repayment part and the loan part to roll over the debt, while the current period and especially 2017 is the peak of public debt. Therefore, if we raise the ceiling, the debt repayment pressure will be much greater.

Therefore, to ensure sustainable public debt safety, we must definitely control the public debt ceiling to not exceed 65% of GDP, government debt to not exceed 55% of GDP and the country's foreign debt to not exceed 55% of GDP until 2020.

This is also the determination of the Government and has been presented to the National Assembly. To ensure the country's development, there must be an institution to mobilize resources to the maximum extent. Everyone says that there are many remittances, a lot of foreign currency in the people's pockets, and a lot of gold in the people's pockets. Now the Government is promoting start-ups and innovation, more businesses are established, more investment is coming in, the business environment is better, people are willing to spend capital to invest and do business, and the State must do this.

Every dollar invested by the State only has a “priming” effect. Restructuring public investment must be included in restructuring budget revenue and expenditure and ensuring sustainability and safety of public debt. To do so, the State budget must only invest in essential, important, priming things and strive to reduce the proportion of public investment in total social investment. Second, the capital utilization coefficient (ICOR) must decrease, meaning that investment efficiency must increase. These are the two goals set in restructuring public investment in the coming time.

To do so, it must be done systematically and scientifically. The public investment plan for the next 5 years has been determined, but each year we must tighten fiscal discipline; consider savings as a national policy and tighten discipline, try to increase revenue to increase spending, and spending must be within the capacity of the economy, borrow money in proportion to the ability to repay, definitely not raise the public debt ceiling, and not leave debt for future generations to bear.

The Deputy Prime Minister said at the group discussion that spending is based on the economic growth scenario, but if the current growth scenario forecast is below the set plan, the public debt ceiling will increase. So how should this be overcome?

In fact, the government has reduced the budget deficit this year to a very low level of 3.5%, and thus the total capital for basic construction investment is not as expected by ministries, branches and localities.

The Government is determined to control the total deficit absolutely according to the number decided by the National Assembly, that is, not exceeding it. But economic growth is not achieved, the current forecast GDP size is 4.6 million billion VND, so to overcome this, there will be an additional principle that if localities reduce revenue, they must adjust expenditures.

Second, in the coming time, we must strive to increase budget revenue, including domestic revenue and customs revenue. In customs revenue, we must strictly manage taxable prices. In domestic revenue, we must expand the tax base by gradually increasing the proportion of the informal economy to the formal one; encourage 1.7 million registered business households to establish new enterprises; and strengthen the non-state-owned document and invoice regime.

Thank you very much, Deputy Prime Minister!

N.Manh/bizlive