In an interview granted to a VOV reporter, Dr. Kien praised the National Assembly’s constant efforts in addressing issues relating to public debt and State budget collection.
VOV: The 13th National Assembly (NA)’s 7th session approved the Law on Public Investment. Could you talk more about the law’s role in increasing the effective use of public investment and State budget?
Dr. Kien: The law was debated for years and passed at the seventh NA session. We appreciated the NA’s determination in increasing State budget collection and effective use of public debts.
Following the Party’s Resolution on investment restructuring, with a focus on public investment, the implementation of a Law on Public Investment is essential, aimed at intensifying management and improving effectiveness of State’s resources for a synchronized infrastructure in the future.
|Dr. Nguyen Duc Kien
The law is of great significance in preventing scattered investment in a number of localities and industries in Vietnam. Scattered investment has decreased the effectiveness of public investment but driven up the volume of public debts in recent years.
The public investment law will reduce wastefulness and ensure transparency in the use of State budget. It will also identify responsibility of project managers and investors and ensure an adequate supply of capital sources.
VOV: Could you elaborate on the current mechanism of investment distribution in Vietnam?
Dr. Kien: I share the same view as the Minister of Planning and Investment Bui Quang Vinh on several shortcomings in investment allocation.
An unfair distribution of investment capital will cause hurdles to national economic development.
VOV: What is your assessment on Vietnam’s public debts?
Dr. Kien: Vietnam always publicises all of its public debts. The Prime Minister has made a decision on public debt borrowing and payment plans in 2014. Accordingly, the country will pay VND208,833 billion and borrow additional VND367,000 billion.
At present, we have not yet had an appraisal standard for public debts. There’s no ground to say Vietnam’s public debt is unsafe. In reality, public debts of the US account for 100% of its GDP, but none says this ratio is unsafe.
Similarly, Japan’s public debts made up nearly 200% of its GDP at certain periods of time, but the rate was still within the safe parameter. Vietnam’s public debts are predicted to hit 60% and 65% of GDP in 2015 and 2020, respectively. Who knows whether the proportions are dangerous or not?
In my opinion, the core matter is how a country can pay its debts.
VOV: What lessons Vietnam should learn from other countries in dealing with public debt?
Dr. Kien: Statistics showed that in the 2007-2013 period, public debt growth of Vietnam was twice as high as the figures reported in previous years.
In 2006, the country’s public debts accounted for 27-28% of its GDP, while the current ratio hit 55%. The 11th Party Congress’ Resolution pays due attention to settling public debts and increasing efficiency of public investment.
Actually, the restructuring of public investment aims to increase the efficient use of loans that a war-torn country like Vietnam has to borrow to boost its economic growth.
VOV: Thank you.