Vietnam PM Warns of National Fiscal Collapse

For the first time a Vietnamese prime minister admitted the country’s public debt would have breached the ceiling if fully calculated.


       PM Nguyen Xuan Phuc speaks at a finance ministry conference on Jan. 6. Photo: VGP

The collapse of the national fiscal system would be unavoidable if state budget constraint persists, Prime Minister Nguyen Xuan Phuc said at a conference of the Ministry of Finance on January 6.

The chief of the cabinet stressed that the country’s public debt has grown rapidly over the past five years, by 18.4% per year on average, three times the pace of GDP growth, according to a report by the government portal.

The PM listed chronic hurdles of the national financial system such as narrow room for fiscal maneuvers, difficulties to balance the state budget, and swelling regular expenditures.

According to statistics announced by the finance ministry, Vietnam’s public debt expanded to 64.73% of GDP last year from 62.2% in 2015. Government debt, meanwhile, reached 53.62% of GDP, compared to 50.3% in 2015. 

The two indicators are nearing the respective thresholds of 65% and 54% of GDP set by the National Assembly last November.

“The reported public debt is close to the permitted cap, but would have surpassed the upper limit if fully calculated,” the PM said.

According to the Vietnamese legislation, the country’s public debt includes debts incurred by the central government, local governments and government guarantees. Debts of the central bank, policy banks, state-owned enterprises and social welfare funds are not included.

Tuan Minh / BizLIVE