National Assembly deputies worried about growing public debt

Wednesday, 2014-10-22 11:28:22
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Deputies are taking part in group discussion on the second day of the 13th National Assembly’s 8th plenum.
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NDO - National Assembly deputies have expressed their concerns over Vietnam’s public debt as the ratio of debt to gross domestic product nears 65%, the threshold at which debt is considered dangerous.

Under the national strategy on public and foreign debt for 2011-2010, Vietnam’s public debt − which includes debt of the central government, Government-guaranteed debt, and debt of local governments − is not allowed to exceed 65% of GDP in 2020.

However, national debt was expected to reach 64% of GDP by the end of 2015 and debt from issued bonds was not included in public debt, said Nguyen Duc Kien from Soc Trang province on October 21, the second day of the 13th National Assembly’s 8th plenum.

In addition to worries over a high level of public debt, many deputies were concerned that loans were not used effectively as evidenced by the ratio of debt payments to total revenue, which came at 26.2%, more than the 25% as previously approved.

They noted that in some developed countries, the level of bad debt is high but their payment obligation only accounts for less than 10% of total government revenue.

According to Deputy Do Kim Tuyen from Hanoi, the Government report on the country’s socio-economic development failed to clearly determine causes of weaknesses in the national economy.

She said the recent economic slowdown came as a result of slow restructuring, poor management, high public debt and bad debt, slow credit growth, and weak purchasing power among others.

The Government should focus on restructuring the economy and re-organising enterprises while simplifying administrative measures in order to achieve socio-economic targets for 2015, said deputy Trinh Thanh Khiet, also from Hanoi.

According to Ho Chi Minh City’s deputy Tran Du Lich, banks should further cut their interest rates to support enterprises as the number of companies forced to close or suspend their operations remained high and the list has started to see a number of medium and large companies.

Lich added that the situation was negatively affecting job creation, tax revenue, bad debt and overall economic growth.

Many deputies were worried that Vietnam’s economy may fall behind others in the ASEAN region, saying that Vietnam’s growth was stagnating while a number of regional countries had seen improvement and maintained high economic growth.