The borrowing aimed to ensure a balance for the State budget and promote socio-economic development at an appropriate level of cost risk. Of the sum, around 1.6 quadrillion VND would be borrowed for the central budget while 134.4 trillion VND would be for refinancing.
The plan also aimed to tightly control debt indicators to ensure budget safety and accelerating the development of the domestic capital market.
The Government asked the Ministry of Finance to be active in issuing bonds, restructuring debt portfolio and developing the Government bond market. In addition, the ministry must arrange resources for debt payment to prevent overdue debts which might affect the Government’s international commitments.
The Government would limit the issuance of new guarantees for enterprise loans with the increasing rate of the total outstanding Government-backed loans not exceeding the growth rate of the country’s gross domestic product (GDP).
Regarding the borrowing of local governments, the deficit level would be capped at about 0.2 percent of GDP.
The increasing rate of short-term foreign commercial loans of enterprises and credit institutions would be controlled at less than 18-20 percent per year and below 6.35-7 billion USD for medium and long term loans to ensure the country’s foreign debt within the allowable limit.
In 2021, the Government would borrow more than 624.2 trillion VND, around 84 percent of which were from domestic lenders and the rest from foreign sources.
Of the figure, 318.87 trillion VND would be spent in offsetting overspending, 260.9 trillion VND for repaying debts and 44.4 trillion VND for refinancing.
This year, the Government must repay debts worth 394.5 trillion VND.
Local administrations would have to borrow 28.79 trillion VND and pay debts worth 6.6 trillion VND, including 2.66 trillion VND in interest, this year.
The Government asked the Ministry of Finance to develop the public debt management plan for the 2021-2025 period, together with a public debt strategy for 2021-30 and a project to improve the credit rating to 2025 with a vision to 2030 as well as a project to promote the application of information technology in public debt management for approval.
The focus must be placed on promoting the development of the domestic capital market and the Government bond market towards diversifying products and investors with priority given to long-term investors and attracting the participation of foreign investors in the domestic debt market.
The State Bank of Vietnam must keep a close watch on foreign loans of enterprises to ensure they are within the allowable limit.
The central bank was urged to work with the Ministry of Finance to develop the legal framework and tools for managing foreign debts appropriate to the economic development requirements in the context that Vietnam becomes a middle-income country.
The ratio of public debt to GDP of Vietnam decreased from 63.7 percent in 2016 to 55.3 percent in 2020, within the National Assembly’s set ceiling of 65 percent, meaning that the pressure from public debts eased significantly during the past five years./.
Source: VNA