NASC: MoF to be primarily responsible for public debt managment

Tasks performed by three bodies better done by one, discussions between National Assembly Standing Committee and government representatives hears.

Members of the National Assembly Standing Committee (NASC) have proposed that the Ministry of Finance (MoF) be the main agency responsible for assisting the government in the management of public debt, instead of the three bodies currently stipulated by law.

Discussions on the revised Law on Public Debt Management between NASC and government representatives heard that having a single body is necessary to restructure the State budget towards better management of public debt and a stabilized national finance system.

The committee proposed that MoF shoulders this responsibility, which would involve tasks it is currently performing and new ones, including the mobilization of domestic and foreign loans, the management of borrowed capital, monitoring debt payment obligations, and negotiating and signing domestic and foreign loans, including official development assistance (ODA), preferential loans, and foreign commercial loans, among others.

The proposal was put forward in the context of the government still wishing to maintain the status quo, citing a desire to avoid causing organizational reshuffling and instability at the three agencies currently involved.

Under the existing Law on Public Debt Management, the Ministry of Planning and Investment (MPI) is responsible for issues relating to ODA while the State Bank of Vietnam (SBV) is assigned to work on negotiations and the signing of agreements between Vietnam and international financial and monetary institutions.

NA Vice Chairman Phung Quoc Hien mentioned issues of concern, such as the sharp increase in public debt and excessive ODA loans over the past few years, attributing them to shortcomings in public debt management. He said there existed overlapping roles in public debt management and proposed a review of the articles in the current law involving the role of MPI and the SBV.

Agreeing, NA Secretary General Nguyen Hanh Phuc said that Vietnam is carrying out administrative reform but “how can one call it a proper reform if one job is being assigned to three agencies?” Other ministries and ministerial-level agencies would be responsible for cooperating with MoF in public debt management, he suggested.

While debt ratios are still within safe limits, both the government and foreign creditors have noted rapid growth because of “weaknesses in managing and using loans.” In the 2001-2015 period, foreign debt increased 6.5-fold, according to a report prepared by MoF for legislators in May.

Minister of Finance Dinh Tien Dung said that some debtors of government-guaranteed loans have lost their repayment capacity, passing on the burden to the government. He suggested that the Law on Public Debt Management be amended to include stricter rules on borrowing and on enhancing capital management.

Data from the ministry show that debt ratios were still within limits as at the end of 2016. Public debt, government debt, and foreign debt stood at 63.7 per cent, 52.6 per cent, and 44.3 per cent of the country’s GDP, respectively.

The World Bank has forecast that Vietnam’s public debt will climb to 64.4 per cent in 2017 and 64.7 per cent in 2018. The growing debt will impose a steadily increasing burden on the economy and make it harder to pare back the budget deficit, the bank said in a report released last year.

by Quang Huy / VET