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NA debates revised draft law on public debt management

Tu Giang
Monday,  Jun 19,2017,21:37 (GMT+7)
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NA debates revised draft law on public debt management

Tu Giang

HANOI – Deputies of the National Assembly (NA) last Friday had a heated debate over a draft Law on Public Debt Management, focusing on whether a single body should be mandated to manage public debt or three different agencies as per the current practice.

According to the draft law, the Ministry of Finance is responsible for managing reciprocal capital, balancing repayment obligations, and allocating loans. Meanwhile, the Ministry of Planning and Investment is tasked with managing official development assistance (ODA) loans.

The State Bank of Vietnam (SBV) takes charge of negotiating loans from the World Bank (WB) and the Asian Development Bank (ADB).

Finance ministry wants single body

The current model of public debt management is the same as the draft law approved by the NA. Earlier, Prime Minister Nguyen Xuan Phuc and NA Chairwoman Nguyen Thi Kim Ngan advocated for merging them into a single managing body, but many NA deputies did not agree.

Finance Minister Dinh Tien Dung said there are severe shortcomings in the current management mechanism. The Ministry of Planning and Investment is conducting negotiations over a new legal framework for ODA.

He said the agreement covers a range of loan conditions like terms, interest rates and tax incentives. Hence, if the framework is assumed by the Ministry of Planning and Investment now, the Ministry of Finance will find it hard to negotiate a formal agreement for specific projects or programs later.

“There are loan commitments for Vietnam, but they may not meet our requirements like high interest rates and contractor appointment. Therefore, we would not borrow these loans. Why should we follow these commitments at the outset (by signing the framework agreement)?” he pondered.

For example, he added, supposing that Japan agrees to lend Vietnam US$1 billion a year under the framework agreement. Then the Finance Ministry will assume talks over specific loan terms for each program or project, which may be at odds with terms and conditions provided for in the framework agreement.

NA deputies refuse change

Meanwhile, NA deputies who commented on the draft law shared the same opinion about keeping the three public debt management agencies unchanged.

Deputy Bui Thanh Tung of Haiphong City said the draft law should give the Government the right to assign specific tasks like the management of public debts, ODA loans, and preferential loans to each management body. Each agency shall be responsible for the whole procedure, including negotiation, agreement signing, loans, and capital allocation.

That the Government maintains the status quo of the three agencies is reasonable, said deputy Nguyen Manh Cuong of Quang Binh Province, explaining that the SBV is the official representative of Vietnam at the WB and ADB.

Therefore, he stated, this creates favorable conditions for the negotiation and signing of ODA loan agreements.

Deputy Nguyen Thanh Xuan of Can Tho City said the transfer of function from the Ministry of Planning and Investment and the SBV to a single body is inappropriate and causes unnecessary disruption.

Deputy Bach Thi Huong Thuy of Hoa Binh Province said the current Law on Public Debt Management and its draft law all ask the Government to manage public debts. Besides, according to the Government Organization Law, the Government has the right to assign tasks to specific agencies.

“Thus, that the Government allocates tasks to its agencies is in full compliance with prevailing regulations,” she stressed.

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