The Prime Minister promised to keep public debt below 65% of GDP.

Following the World Bank's recommendation to control public spending, Prime Minister Nguyen Tan Dung affirmed that Vietnam is determined to keep debt within permissible limits.

The Prime Minister affirmed that Vietnam has good control over public debt. Photo: Chinhphu.vn

At a meeting with the head of government on the afternoon of July 24, the World Bank's Country Director for Vietnam, Ms. Victoria Kwakwa, highly appreciated the government's efforts and policies in the first six months of the year, such as fiscal expenditure management, public debt control, state-owned enterprise reform, banking restructuring, bad debt resolution, and agricultural sector restructuring;

Nevertheless, the World Bank representative also recommended that Vietnam needs to manage fiscal spending better and further accelerate its restructuring priorities.

“The World Bank is ready to support Vietnam with ODA to assist the budget, including concessional funding (IDA) to support capital increase for the Vietnam Asset Management Company (VAMC), and to cooperate with and support the restructuring of the agricultural sector,” said Victoria Kwakwa.

She also affirmed her priority in cooperating with Vietnamese ministries and agencies to prepare, sign, and implement IDA 17 financing agreements for Vietnam, of which approximately $1.5 billion has already been signed and a portfolio is being prepared for the 2016-2017 fiscal year with a total financing value of approximately $2 billion.

Midweek, this largest multilateral donor also announced that Vietnam's public debt at the end of 2014 reached 2.35 trillion VND, equivalent to 110 billion USD (including government debt, government-guaranteed debt, and local government debt).

At the press conference, Victoria Kwakwa also recommended that the government strengthen fiscal policy in line with growth to reduce the need to cover budget deficits, while also rationalizing spending and improving the efficiency of public investment.

During the meeting on the afternoon of July 24th, the Prime Minister stated that although some results had been achieved, the Vietnamese Government was still not satisfied and was fully aware of the difficulties and challenges that needed to be addressed.

Regarding public debt, the government stated that it will restructure it, review fiscal restructuring, reduce the budget deficit according to a roadmap, reduce recurrent expenditures, and ensure debt repayment plans are met.

The head of government said that new loans would focus only on investing in essential socio-economic infrastructure; minimizing waste, losses, negative practices, and corruption. “Vietnam is determined to control public debt within the permitted limits, below the 65% threshold as stipulated, ensuring national financial security and gradually reducing the public debt ratio after 2017,” the Prime Minister emphasized.

Prime Minister Nguyen Tan Dung stated that the Government is decisively directing efforts to accelerate the pace and improve the quality of equitization of state-owned enterprises, focusing on reducing the state's capital stake in enterprises, reforming corporate governance, and listing on the stock market.

Regarding bank restructuring, the Government is directing the acceleration of phase 2 of restructuring weak commercial banks according to plan. At the same time, the Government is also determined to reduce bad debts; and is calculating to further increase capital for the Vietnam Asset Management Company (VAMC).

"The target of reducing non-performing loans to 3% by September 2015 is achievable," the Prime Minister acknowledged.

According to VnExpress