Lawmaker suggests higher public debt ceiling

While investments have yet to reach the limit, the public debt ceiling could be raised to 80% of gross domestic product (GDP), said a National Assembly (NA) deputy.

During a discussion on the country’s socio-economic performance and State budget during the ongoing NA session in Hanoi on May 22, lawmaker Nguyen Manh Tien of Tay Ninh Province said six donors had pledged US$9.9 billion in aid for Vietnam but just US$3.5 billion had been disbursed. However, further disbursements of foreign loans are almost impossible as public debts have reached the ceiling, disabling the Government to set aside reciprocal capital for foreign-funded projects.

According to Tien, in the investment phase, the public debt cap could be as high as 80% but the important thing is the quality of projects. Economic experts have said many projects using public funding are of low efficiency.

What needs to be done is to handle ineffective projects and continue investment activity at the same time, instead of suspending investments given high public debts, he said.

International economic experts have recommended that Vietnam loosen the cap to have funds for carefully assessed projects while increasing control on inefficient projects funded by the State.

A report of the State Audit Office of Vietnam sent to the NA showed that the country’s public debts had amounted to VND2,868,881 billion as of end-2016, VND5,012 billion higher than the amount shown by Government data and equivalent to 63.71% of GDP. Of the amount, Government debts were VND2,373,175 billion (52.71% of GDP), Government-guaranteed debts VND461,635 billion (10.25% of GDP) and debts owed by local governments VND34,071 billion (0.76% of GDP).

According to the State Audit, public debts were still within the NA-approved level of 65% of GDP but had grown steadily since 2015.
 

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