Minister counsels Vietnam to lift debt ceiling
Minister counsels Vietnam to lift debt ceiling
Vietnam should consider raising its debt ceiling, otherwise the country will fall short of capital for basic construction, Minister of Planning and Investment Bui Quang Vinh urged Monday.
The country’s public debt is expected to reach 64.9 percent of GDP in 2016, almost hitting the cap of 65 percent, Vinh said at a meeting in Hanoi to develop a public investment plan for the 2016-2020 period.
With the debt limit reached, Vietnam will not be allowed to issue bonds to raise capital as per the law on public debt, Minister Vinh said, adding that the country will thus have no money for socio-economic development projects.
The minister thus called on the government to review the public debt law.
“It’s not important whether the public debt is equal to 65 percent or 70 percent of the GDP, because the rate is 200 percent in some countries,” he said. “What matters is the ability to clear the debt.”
The debt-paying ability could be improved by using the capital effectively, and increasing the state budget collection, according to the minister.
“If so, we can persuade the National Assembly to raise the debt ceiling,” he said.
“Of course, we have to use effective projects to prove to the National Assembly that Vietnam is capable of repaying the debts.”
Minister Vinh said government bonds are crucial in enabling Vietnam to carry out major projects, which could not be done with capital merely from “the modest state coffers.”
The minister also noted at the meeting that many localities have made false reports on their public debts.
“The real outstanding debt could be double the figure stated in the reports submitted by some localities,” Minister Vinh said.
He also complained that many localities have sought permission to implement projects whose total investment is ten times bigger than their financial ability.
