Public debt growth due to missed GDP target: minister

March 21,lịch thi đấu hom nay 2017 - 09:53

The main reason for the rapid rise of Việt Nam’s public debt is failure to achieve the targeted economic growth rate and the resulting tax collection shortfall, Finance Minister Đinh Tiến Dũng said yesterday.

Finance Minister Đinh Tiến Dũng delivers speech during a debate in the National Assembly Standing Committee (NASC) about amendments to the Law on Public Debt Management yesterday. — Photo danviet.vn

HÀ NỘI — The main reason for the rapid rise of Việt Nam’s public debt is failure to achieve the targeted economic growth rate and the resulting tax collection shortfall, Finance Minister Đinh Tiến Dũng said yesterday.

"The 2011-15 GDP growth was only 5.91 per cent whereas the set target was seven per cent,” he added.

Although the economic growth rate did not reach the designated target, Việt Nam had to mobilise capital for investment in transport infrastructure, social security and balance its budget in items supported by overseas assistance, he said.

The minister spoke during a debate in the National Assembly Standing Committee (NASC) about amendments to the Law on Public Debt Management.

Dũng said after six years of implementation, the law had contributed to mobilising capital to offset State budget overspending, and created investment resources for the economy’s key sectors through the re-lending of foreign loans by the Government and through Government guarantees for domestic and foreign loans.

But given the country’s international integration and the changes in the legal system, many articles of the law were no longer relevant and need to be adjusted, he said.

The majority of NA deputies agreed on the need to revise the law, and also discussed the scope of public debt and which agency should manage the public debt.

In response to a question raised by Chairwoman of the National Assembly’s Justice Committee, Lê Thị Nga, on the calculation of public debt and the reason for its rapid increase in recent years, the Minister of Finance blamed weak management.

When questioned about whether the debts of State-owned enterprises should be subject to the Law on Public Debt Management, Dũng said the law shouldn’t include state-owned companies. The ministry defines public debt as government debt, government-guaranteed debt and local-government debt, as regulated by the current law, he said.

According to Dũng, as SOEs are one-member limited company, they have to bear responsibility for the borrowed capital.

"If they fail to pay the debt it would be dissolved in accordance with the law on bankruptcy," he said.

Many NA deputies agreed with Dũng’s opinion, however, some of them expressed their concern over the consequence of excluding SOE debts.

Nguyễn Văn Giàu, head of NA’s External Affairs Comittee, said bad debts of many credit institutions would increase sharply because SOEs were their biggest customers, and many of them were in difficulties.

Who’s in charge

Regarding to the tasks and authoritiy of agencies in public debt management, NA deputy chairman Phùng Quốc Hiển said it was time to debate regulations relating to  guarantees and re-borrowing of foreign loans by the Government.

Many corporations could not repay the debt although they were backed by the government, Hiển said.

To settle the above-mentioned problem, the Finance and Budget Commitee proposed that the Mininstry of Finance be the sole agency responsible for land and debt payments rather than many agencies currently managing public debts, leading to loose management and the rapid growth of public debt, the committee said.

Đào Quang Thu, Deputy Minister of Planning and Investment didn’t agree with the committee’s proposal, saying that the current management mechanism was suitable to the country’s economic and political mechanism and legal system, creating a mutual supervisory mechanism between ministries.

Currently, the debt management is shared by the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Việt Nam.

Deputies suggested that inadequacies in mobilising government loans, re-lending and guarantee conditions should be improved and tightened to ensure the efficiency in the use of capital and ensure debt security in accordance with the policy of the State.

The NASC also debated the revision of the Foreign Trade Management Law. 

Foreign trade law