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Experts call for action on public debt

Update: August, 05/2014 - 08:00
A stretch of Nhat Tan Brigde crossing the Hong (Red) River in Ha Noi. The bridge was built using Japanese official development assistance (ODA) and State funding. Economists have called for additional efforts to enhance the use of public funds and ODA to shore up public debt management. — VNA/VNS Photo Trong Dat

HA NOI (VNS) — Economists have suggested that the Government needs to change loans from short-term to long-term and make a connection between internal and external (foreign) debts to better manage public debts.

Vu Dinh Anh, an economist with the Finance Academy, said at a recent workshop on public debts held by the National Assembly's Finance and State Budget Committee that there were some measures that needed to be implemented determinedly and synchronously when dealing with public debts.

He was quoted by Hai Quan (Customs) newspaper as saying that it was necessary to complete all legal frameworks and tools to manage public debts.

"The effectiveness of mobilising and using of loans, especially official development assistance (ODA) needs to be enhanced to eradicate all unreasonable processes in mobilisation and payment," he said.

"Meanwhile, risk management and supervision of public debts must also be enhanced with priority to research on building and implementing projects to solve risks," Anh added.

He commented that the Ministry of Finance should have necessary solutions to ensure the security and safety of public debts by changing them from short-term loans into long-term ones, issuing Government bonds for longer durations, reducing deficit of the State budget and avoiding repayment of old debts through new loans.

"However, the Ministry of Finance cannot do all these tasks without directives from the Government, the close supervision of the National Assembly and the co-ordination of agencies, organisations and enterprises," Anh said.

Agreeing with Anh on the importance of a completed legal framework on public debt management, Dang Van Thanh, a senior economist of the National Assembly, said that legal documents in Viet Nam regarding the issue were just regulations and principles.

"There needs to be a consensus on the notion of debts and debt management in the documents, such as external (foreign) debt, short-term, medium-term and long term loans and ODA along with Government's commercial loans, grace period, and guarantee for a foreign loan," Thanh said.

He said that one drawback in the public debt management system at the moment is the lack of a connection between the management of external/foreign debts and internal debts.

"There needs to be a complete legal framework in these two managements, especially the clue in income, debt information sharing and debt index supervision," he said.

Dinh Tuan Minh from the National Assembly Economic Committee's macro-economy consultation group said that the Government should take into account all risks that could happen to public debt.

"To better manage public debt, it is necessary to sum up all sources that form these debts," he said adding that right now the related law just counted Government debts, those that Government guaranteed and those of local governments as public debts.

"There are other sources of public debts coming from loans of organisations which the Government may be jointly liable for when organisations fail to repay debts," he said.

He explained that this was the result of state-owned enterprises failing to pay their debts, forcing the government to bail them out.

"The analysis and evaluation of debts of these organisations should be an important part of reports on public debts," he said.

Previously, the Ministry of Finance and Government had said that Viet Nam's public debts were still within the safety net.

Finance Minister Dinh Tien Dung, in his Q&A session at the National Assembly in June, said that the debt was at 54.1 per cent of the GDP last year, which was within manageable levels. — VNS


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