Measures proposed to manage public debt level
Public investments that exceed the State budget’s payment capacity should not be implemented, Finance Minister Dinh Tien Dung said, referring to it as one of a string of measures to ensure public debt stays within safety limits.
Minister Dung admitted that public debt has been rising quickly in recent years but is still under control. He affirmed that his ministry has been working with other ministries and sectors to keep public debt within safety limits.
As of December 31, 2015, the country’s public debt made up 62.2% of its Gross Domestic Product (GDP) and its foreign debt was equal to 43.1% of GDP. Both numbers are still within safety limits set by the National Assembly, 65% and 50%, respectively.
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Meanwhile, the Government’s debt reached 50.3% of GDP, which, however, surpassed the allowed 50% threshold by 0.3%, according to the Ministry of Finance.
For Dr. Nguyen Dinh Cung, Head of the Central Institute for Economic Management, the Government should build a public-debt management institution with improved forecast and analysis capacity and transparent operation.
Independent public debt audit will contribute to minimising State budget’s wastefulness, reducing unnecessary spending and public debt, Cung suggested.
Economic experts pointed out that managing public debt also requires monetary, exchange rate, structure and foreign trade measures.
At a conference on international experience on public debt management recently co-held by the Agency for Debt Management and External Finance and the International Monetary Fund (IMF), John Gardner, Head of the IMF expert delegation, said effective public debt management should be based on a wide range of criteria, such as the local/foreign currency structure, average payment time, the debt scale with payment time of less than one year.
According to the Agency for Debt Management and External Finance, the agency will work with relevant agencies to develop the domestic capital market to diversify bond terms and issue government bonds with terms of at least five years and expand the average terms of government bonds during 2016-2020 to six to eight years to mobilise capital.