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Medium-term debt management program okayed

The Saigon Times Daily
Tuesday,  Apr 25,2017,23:07 (GMT+7)
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Medium-term debt management program okayed

The Saigon Times Daily

HCMC - Prime Minister Nguyen Xuan Phuc has approved the medium-term debt management program for 2016-2018 with a target to harness public debt at no more than 65% of GDP, of which government debt should not exceed 54% of GDP and national foreign debt is no higher than 50%, the Government news website reports.

The overall objective of the program is to look for loans at appropriate costs and risk levels, meeting the needs of balancing the State budget and socio-economic development in each particular period. Loans must be allocated and used for the right purposes, ensuring repayments.

The program sets a specific goal for gradually reducing domestic and foreign borrowings to make up for the State budget deficit. The budget deficit is set at no more than 5.4% of GDP in 2016, about 3.38% in 2017 and 3.3% in 2018.

The government’s borrowings to fund the State budget deficit for the next three years are around VND606.4 trillion, broken down into some VND247.2 trillion in 2016, VND172.3 trillion in 2017 and VND186.9 trillion in 2018.

Borrowings for repayment of the principal of the central budget debt are determined at VND414.4 trillion, with VND204.4 trillion to be raised in 2016, VND144 trillion in 2017 and VND138 trillion in 2018. The new loan amount for annual principal repayment is decided by the National Assembly (NA) based on a report by the Government.

Arrangements of foreign loans for re-lending are some VND118.4 trillion, including about VND32 trillion in 2016, VND42.4 trillion in 2017 and VND44 trillion in 2018.

Sharp cuts in Govt’s credit guarantees

As per the NA’s Resolution 25/2016/QH14 dated November 9, 2016 on the national five-year financial plan for 2016-2020, the Government’s credit guarantees should be significantly brought down.

Guarantees for the issuance of bonds by the Vietnam Development Bank and the Vietnam Bank for Social Policies are imposed a maximum limit with the annual debt repayment obligation to stabilize outstanding loans. For foreign loans guaranteed by the Government and are being paid out, the net withdrawal limit is US$1 billion per annum.

The provision of new government guarantees for domestic and foreign loans shall be suspended. The list of programs and projects prioritized for Government guarantees shall be reviewed, after which the limits for Government guarantees in 2016-2020 and annually will be set, keeping debt within the range approved by the NA.

Local overspending and local government debt is regulated by the 2015 Law on State Budget, with the budget deficit determined at VND6 trillion for 2017 and about VND11.1 trillion for 2018.

The limit on foreign commercial borrowings (net borrowings) by enterprises and credit institutions without Government guarantees is around US$5.5 billion per year. Controls on the country’s short-term external debt should be further tightened, with a maximum annual growth rate of 8-10%.

Resources should be proactively allocated to fully meet the Government’s debt repayment obligations, preventing overdue debts that affect the Government’s international commitments.

Enterprises and credit institutions should show a sense of responsibility for the use of loans for the right purposes, and should not use short-term loans for medium- and long-term programs and projects.

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Giấy phép Báo điện tử số: 321/GP-BTTT, cấp ngày 26/10/2007
Deputy Editor-in-Chief: Pham Huu Chuong
Managing Editors: Nguyen Van Thang, Huynh Cam Tung
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