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Gov't aims to reduce public debt

Update: March, 07/2015 - 09:23

Finance Minister Dinh Tien Dung told Ha Noi Moi (New Ha Noi) that achieving equitisation targets for State-owned enterprises and alleviating debt would be high priorities this year.

Public debt is one of the issues that attracted the special attention of the public in 2014. What will the financial sector do to control the debt, thereby ensuring national financial security in 2015?

Public debt is not only an issue of the National Assembly and the Government; the people are also very interested. Success has been achieved in the management of public debt, such as ensuring essential capital for development investment, job creation and poverty reduction. However, there are still some problems in debt management such as high public debt levels, risks of liquidity and difficulty in debt payment of some State projects.

To strengthen public debt management and debt control, thereby ensuring national financial security, the ministry has proposed to the Prime Minister to issue an order strengthening the management and improving the efficiency of use of public debt. It includes strict management of public debt within the permitted limits; focusing on available funds to invest, develop and build essential socio-economic infrastructures; continue the restructuring of public debt; and reduce pressures in the short-term debt payment and interest expenses.

Particularly, the ministry will gradually adjust the structure of the State budget towards health, focus on domestic income, reduce recurrent spending and increase investment capital, as well as prepare enough financial resources for debt payment. In 2015, the ministry will set up a mid-term project for issuing international bonds to mobilise long-term loans that restructure short-term debt and reduce borrowing costs.

The number of State-owned enterprises (SOEs) set to be equitised during the 2014-15 period is 432. Will this goal be achieved on time?

A total of 143 SOEs were equitised in 2014. This number is twice that recorded in 2013. Meanwhile, 167 enterprises were re-structured in 2014, which is an increase of 160 per cent compared with that of the previous year.

The restructuring and equitisation processes are still slower than required as the direction taken by some units is not enough. Strong measures will be implemented this year to complete the government's target. Enterprises approved for the restructuring and equitisation processes have to establish a steering committee, specify valuation of firms, and strive to finish the entire equitisation plan in 2015. The units continue to review the list of new classified SOEs under decision of the Prime Minister, and deal with difficulties and obstacles in time to speed up the enterprises' restructuring process.

According to the 2015 State budget announced by the finance ministry, the total State budget revenue is estimated at VND911.1 trillion ($43.3 billion), while the world oil prices tend to decline. What is the solution to reduce the impact on the State revenue?

The total revenue related directly and indirectly to the oil price accounted for approximately 20 per cent, according to our calculations. Except the impacts of the prices and the import and export tax of crude oil and other petroleum products, the increase or decrease of the oil price by US$1 per barrel will have an equivalent impact on the state budget revenues of approximately VND2 trillion ($95.2 million).

The oil price fall has a two-way impact on the economy and the State budget revenue. On the one hand, low oil prices will reduce the input costs, thereby promoting the development of production, business, and creating more revenue for the state budget. On the other hand, the oil price decrease will affect the exploitation of oil fields, and may make a deep cut in the State budget revenues. So those in management need to pay attention to limiting the unfavorable impact of oil prices on the economy in general, and the budget revenue and expenditure in particular.

The ministry is closely monitoring the crude oil price movement, and will adjust the import and export tax for preferential petroleum products in accordance with the world market to stabilise domestic oil prices. The ministry has directed tax, customs and financial agencies at the local level to focus on revenue collection for the State budget from the beginning of 2015, and to collect revenue from import and export operations.

The ministry has also asked ministries, sectors and localities to carry out solutions to create favorable conditions for production and business to complete socio-economic development tasks in 2015. — VNS

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