Illustrative photo (Source: moit.gov.vn) Thegoal was highlighted in the public debt strategy by 2030.
DeputyMinister of Finance Ta Anh Tuan said at a two-day workshop held in Thanh Hoaprovince on June 21 that the public debt strategy issued on April 14 played animportant role in the socio-economic development in the 2021-2030 period, whichserves as an important basis for continuing sustainable and efficientpublic reform management and ensuring debt safety and national financialsecurity.
Underthe strategy, public debt would not exceed 60 percent, government debt 50 percentand foreign debt 45 percent of GDP, and the amount for debt repayment would notexceed 25 percent of the total budget revenue.
Thestrategy targeted that GDP would expand at an average of seven percent peryear with GDP per capita reaching 7,500 USD by 2030 and a budget deficit ataround three percent of GDP.
Theministry’s statistics showed that public debt expansion decreased from anaverage of 18.1 percent per year in the 2011-2015 period to 6.7 percent in2016-2020. Public debt was at 55.9 percent of unrevised GDP by the end of 2020,compared to the peak of 63.7 percent in 2016, and 43.1 percent of revised GDPby the end of 2021.
Thestructure of public debt had been adjusted in a more sustainable direction withthe percentage of external debts falling from 61 percent of the Government’stotal debt in 2011 to 33 percent in 2021.
Debtrepayment was always guaranteed on time, which contributed to improving thecountry’s credit rating as S&P recently announced to raise Vietnam’snational credit rating from BB to BB with a stable outlook and increasing thefiscal room to strengthen the economy’s resilience to macro shocks, theministry said.
Accordingto Carolyn Turk, World Bank Country Director for Vietnam, Vietnam’s public debtstrategy for 2030 was very important because it related to both fiscal policiesas well as public debt management. The strategy also guided the Government’sborrowing activities after Vietnam become a middle-income country with the goalof becoming a high-income country by the end of 2045, which would require ahuge investment in infrastructure to maintain economic growth of anaverage of 5-6 percent per year in the next 20 years.
Shesaid that attention should be paid to improving the efficiency of localgovernment debt management, pointing out that Vietnam had not yet developed amedium-term local government debt management strategy and had not assessedrisks before borrowing.
TruongHung Long, Director of the Ministry of Finance's Department for Debt Managementand External Finance, said that Vietnam had graduated from IDA, the WorldBank’s concessional finance window, meaning that the country no longer hadaccess to high-preferential capitals as before and Vietnam would have to relymore on market tools to raise capital.
Therefore,it is important to have prudent and flexible medium and long-term borrowing anddebt payment strategies to limit negative long-term consequences, Long said,adding that shocks like the COVID-19 pandemic always required reserve financein the short and medium terms.
Accordingto the strategy, the focus would be on enhancing and strengthening themanagement of finance, budget and public debt, improving the efficiency of loanuse, ensuring debt repayment capacity and restructuring debt portfolio as wellas enhancing digital transformation in public debt management./.
VNA
