Public debt reduction targeted
Public debt reduction targeted
A limit of public debt to no more than 65 per cent of the gross domestic product by 2020 and 60 per cent by 2030 has been targeted in a national strategy approved last Friday.
Public debt is the debt owed by the central Government and local governments as well as loans guaranteed by the Government for financing national operations.
By 2020, the Government's debt is not to exceed 55 per cent of the GDP and borrowing from foreign countries will not be higher than 50 per cent of the GDP. By 2030, the correlative figures should be 50 per cent and 45 per cent.
To meet these goals, borrowing to cover State budget overspending needs to fall to below 4.5 per cent of the GDP by 2015, 4 per cent by 2020, and 3 per cent after 2020.
Prime Minister Nguyen Tan Dung said the strategy was to balance the State budget and investments for socio-economic development in specific periods, to assure efficiency in mobilising and using loans and to maintain the country's financial security.
The nation could issue a maximum of VND225 trillion (US$10.82 billion) worth of State bonds by 2015, and VND500 trillion ($24.04 billion) in 2016-20, to raise funds for developing health care, education and traffic and irrigation works.
It could borrow around VND550 trillion ($26.44 billion) maximum by 2020, or an average of VND55 trillion ($2.64 billion) per year, to build infrastructure for the industrialisation and modernisation process.
Investment and export credits, locality borrowing, as well as enterprises and credit institutions approaching foreign loans, must be performed reasonably and selectively in accordance with Government targets, Dung noted.
Since "domestic capital is decisive and foreign capital is important", borrowing portfolios "need to be adjusted following a direction of increasing domestic debts and gradually lessening the country's dependence on foreign debt".
By 2020, the value of foreign loans was to fall to below half of that of total Government's debt while the value of official development assistance capital should account for about 60 per cent of its total loans from overseas.
Dung urged the country to minimise risks involving currencies, exchange rates and capital liquidity and boost the development of the State bond market. The average term of State bonds should be extended to 4-6 years by 2015 and 6-8 years by 2020, he said.
Dung asked for debt payment responsibilities to be fully performed, noting that there shouldn't be overdue debts to avoid affecting the country's international commitments.
He specified that the Government's debt mustn't exceed 25 per cent of total State budget revenue each year while foreign borrowing should be lower than 25 per cent of total export value. Foreign exchange reserves also needed to be double that of short-term foreign loans annually.
Dung urged the country to speed up the development of the domestic capital market and actively take part in the international capital market, in addition to strengthening risk supervision for national borrowing, especially State corporation debt.
He said appropriate mechanisms for public-private partnership and other investment co-operation models, such as build-operate-transfer, were needed to better mobilise capital from the society for infrastructure development.
These forms should be effectively exploited to gradually replace ODA sources, which were tending to decline, and ease the burden on the State budget, he said.
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