Local public debts huge, but national public debt still safe
Local public debts huge, but national public debt still safe
Local authorities all reportedly have big public debts due to the overly high spending. However, the figures about the debts are not counted on when calculating the national public debt.
The HCM City People’s Committee has affirmed that the city’s public debt is still within the safety line because it does not exceed the 100 percent threshold set by the government.
HCM City has projected the budget of VND7.7 trillion for the spending on investment and development in 2014. The figure represents the 19 percent decrease in comparison with the 2013 estimates due to the lower receipts of the local budget.
A report of the city’s authorities showed that in 2014, the city will have to pay roughly VND3.3 trillion worth of debts, including the principal and interest.
Localities owe money right and left
In September 2013, the State Audit stated that the total arrears in capital construction (the technical and socio-economic infrastructure projects) of all the localities had reached VND91 trillion by the end of 2011. This has put a lot of businesses at the risk of getting dissolved and made thousands of workers jobless.
The issue of the arrears in capital construction has once again been put into the discussion at the latest meeting of the Hanoi People’s Council.
The members of the council said they felt surprised about the rapidly increased arrears. According to Director of the Hanoi Planning and Investment Department Ngo Van Quy, the arrears had climbed to VND3.2 trillion by June 2013.
How much is Vietnam’s sovereign public debt?
The above said high figures about the public debts do not have impacts on the national public debt, because local debts are not taken into account when calculating government’s debts. In other words, the figures about local debts do not make up the national public debts.
The Minister of Planning and Investment Bui Quang Vinh’s report pointed out that the arrears in capital construction had decreased to VND43.358 trillion by mid 2013.
As such, the arrears have been cut by half if compared with the figure of VND91 trillion confirmed by the Ministry of Planning and Investment at the end of 2012.
According to Vinh, the arrears in capital construction have been mostly incurred by local authorities, which account for 94 percent of the total debts.
Hoang Hai, Deputy Head of the Ministry of Finance’s Debt Management and External Finance Department, has shown figures to prove that Vietnam’s public debts have been increasing in the last three years.
In 2012, Vietnam’s total public debts were VND1,641,296 billion, while the figures were VND1,392,020 billion and VND1,124,638 billion in 2011 and 2010, respectively.
Vietnam’s public debts are now equal to 55.4 percent of the GDP, within the safety line.
However, Dr. Le Dang Doanh, a well-known economist, noted that the arrears of VND91 trillion incurred by local authorities have not been counted on when calculating the national public debts.
He also stressed that if counting on the debts incurred by state owned enterprises, the total public debt would be much higher.
vietnamnet
