Government advised to re-define public debt
The Government should consider international practices to re-define its public debt in the revised Law on Public Debt Management that is scheduled for submission to the National Assembly late this month.
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According to the 2009 Law on Public Debt Management, public debt only includes central Government debt, Government-backed loans and local government debt.
However, the World Bank and the International Monetary Fund define public debt as debt liabilities of the public sector including the central government, local administrations, central banks, organisations guaranteed by the State, State enterprises and funds that the Government has committed to pay such as pensions and insurance.
If public debt also includes debt from State enterprises, then the Government could issue policies to better manage the public debt, Huong added.
Huong also recommended adding regulations on reporting and publishing information related to public debt in the revised law.
The IMF has very detailed instructions on reporting and publishing information related to public debt, with public debt reported monthly with information on creditors, debt instruments, currency in debt, payment due dates and interest rates, she said.
Also at the workshop, Le Dang Doanh, former director of the Central Institute for Economic Management, said the revised law should clearly regulate that whoever approves the spending of State funds is responsible for any violations uncovered later.
Doanh also suggested that under the revised law, the Ministry of Finance should be the main agency to assist the Government in the management of public debt, instead of three agencies (Ministry of Finance, Ministry of Planning and Investment and the State Bank of Vietnam) as in the current law.
Nguyen Minh Duc, an independent consultant, said the revised law should separate two loans under public debt, loans for development-investment spending and loans for making up deficits.
Loans under public debt should only be used for development-investment spending rather than both like now, he said.
The Ministry of Finance’s statistics showed that Vietnam’s public debt was approximately 98.4 billion USD, 64.73 percent of gross domestic product (GDP) by the end of 2016.
According to Dr Vu Sy Cuong, from the Academy of Finance, Vietnam’s public debt increased rapidly from 2011-16, at about 18.4 percent per year on average, triple the GDP growth rate.
Thus, the Government is amending the 2009 Law on Public Debt Management to keep public debt below 65 percent of GDP during 2016-18.
Nguyen Minh Tan, deputy head of the Finance and Budget Division under the National Assembly’s Finance and Budget Committee, said that the division appreciated comments from the workshop.
“We will try to clarify some points of the current law in the revised law,” he said.
Actually, the scale of public debt has been under discussion since 2009 and after many discussions the law came to a final definition of public debt, he said.
Tan said he agreed that consistency in the State management of public debt was crucial.
“The responsibility of each relevant agency in managing public debt should be clearly regulated in the revised law,” he said.
On publishing information related to public debt, Tan said the draft law already mentioned this.
The revised law is scheduled to be submitted to the NA at the fourth session which will open on October 23 and conclude on November 22.