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Friday, May 24, 2013

Government asked to clarify standards for assessing public debt

While the government said Vietnam’s public debts are still at manageable levels, a National Assembly deputy proposed the the assessment standards are clarified.
Vietnam’s public debts have recently stirred up public concerns
The NA held a working session on May 22 to review the results of socioeconomic development and state budget in 2012, as well as the implementation of development plans in the first months of this year.
The country’s public debts drew much of the attention of NA deputies during the meeting.
NA Deputy, Truong Thi Anh, from HCM City, said the statement that the country’s public debt rate was at a safe level was unilaterally asserted by the government without any verification from the NA.
“The government should clarify the criteria it uses to assess the safety of public debts and submit it to the NA for approval,” Anh proposed.
Deputy Tran Du Lich said even though it is necessary to control public debt, the NA should take into account the implications of reconsidering the rate of state budget deficit spending, so as to loosen fiscal policies and boost demand.
“The government’s plan to issue VND45 trillion (USD2.14 billion) in bonds for some industries is significant, but first priority should be given to the settlement of debts owed by public investment projects to enterprises, projects already underway and those that are nearly complete,” Lich recommended.
Although a government report released at the NA’s opening session on May 20 said that the country’s public debts are still at acceptable levels, it did not mention a specific figure.
However, a recent report from the Ministry of Finance showed that by the end of 2011 Vietnam’s public debts accounted for 56.7% of the country’s GDP.
Several experts said such this level is high compared to those recommended for developing countries, usually between 30%-40% of GDP.
Concerning current economic situation, deputy Pham Huy Hung from Hanoi said the recent economic developments reveal possible risks while the country’s economy may expand by only 5.03% this year compared to the 6% target by the NA for the year.
Hung, also a staff member of a bank, said that interest rates are not really the major barrier for enterprises in accessing capital. Modest lending is a result of weak demand in the economy, large inventories as well as business difficulties such as weak financial portfolios.
“Well-performing enterprises tend not to expand very much and borrow less. Meanwhile, those that want to borrow generally lack feasible business models. Proper solutions should be worked out to shore up demand, boost sales and increase confidence among banks,” he emphasised.
Deputy Bui Thi An from Hanoi attributed inefficient investment to the lack of calm decisions on macroeconomic regulation and the lack of cooperation among ministries and branches.
She added that more attention should be paid to identifying problems in the economy so as to work out suitable solutions.
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