HÀ NỘI — The Government will scrutinise the use of financial resources to settle bad debts, Mai Tiến Dũng, Minister and Chairman of the Government Office, said on October 4 during a Government press conference.

Dũng said this after a proposal to use State funds to settle commercial banks’ bad debts, as stated in the draft plan on economic restructuring for the 2016-2020 period, was given the cold shoulder recently. Experts said the solution is infeasible as it puts pressure on public debts, especially in the context of State budget deficit.

Under the plan drafted by the Ministry of Planning and Investment, the feasibility of the proposal will be studied by the Ministry of Finance and the State Bank of Việt Nam. Authorities will have to submit a relevant resolution to the National Assembly for approval next year.

Dũng said that this was only a preliminary proposal drafted during the compilation of the plan on economic restructuring for the 2016-20 period.

Based on reviews and assessments of bad debt settlement in the 2011-15 period, the Government would consider carefully the use of financial resources to resolve debts in the future in accordance with targets of restructuring the system of credit institutions and the whole economy from 2016 to 2020, he said.

Implementation would be transparent and effective while ensuring legal regulations and safety of public debts, Dũng said.

Experiences of other countries showed that financial resources were required to be able to settle bad debts thoroughly and effectively. Some countries had to spend a lot of money, even up to 10-15 per cent of their GDP, for settlement.

A series of measures, such as provision for risky loans, enhancement of debt retrieval, sale of mortgaged assets, transfer of bad debts into contribution capital and establishment of the Việt Nam Asset Management Company, have, so far, been initiated to resolve bad debts. However, results have been limited.

To settle bad debts thoroughly, the Government has asked the State Bank of Việt Nam to implement policies to trade debts following market principles and develop a project on restructuring the system of credit institutions in combination with settling bad debts for the 2016-20 period. In addition, the Ministry of Planning and Investment will compile a plan on economic restructuring for the 2016-20 period, which includes bad debt settlement. — VNS