The Ministry of Finance plans to ask the National Assembly forpermission to focus on the issue of five-year Government bonds insteadof those with longer terms as originally planned.
A report inthe Dau tu (Investment) newspaper said the move stemmed low demand forbonds that have terms longer than five years, which has hindered capitalmobilisation for the State Budget.
Statistics compiled by theministry shows that just 82 trillion VND (3.83 billion USD) worth ofG-bonds with terms exceeding five years were issued in the first half ofthe year, down 26 percent against the same period last year.
Theministry said if its proposal is approved, it would also help enhancethe management of public debt, ensuring that it does not exceed thepermitted 65 percent of the GDP.
The ministry's proposal alsoasks the Government to initiate more measures to boost long-termborrowing at home and abroad to be able to balance the State budget.
Accordingto Resolution 78/2014/QH13 issued by the National Assembly last year,from 2015, the Government can only issue long-term bonds with terms ofmore than five years. The resolution also prohibits short-termborrowings to offset overspending.
The resolution was passed inthe context of widespread concerns over rising public debt. The NationalAssembly decided that it is necessary to tighten Government borrowing.
However,the measure has made it very difficult for the Finance Ministry tomobilise capital for State spending. Many G-bond issues have failed thisyear, and analysts have attributed this to the lack of short-term bondsfor investors to choose from.
The Thoi bao kinh te Sai Gon (SaiGon Times) newspaper recently quoted economists as saying that themeasure was ‘quite unreasonable'. They said that it was the FinanceMinistry's job to calculate how much money the State Budget needs andhow much to borrow. It was also the ministry's brief to define the termsof government bonds that have to be issued to optimise use of borrowedfunds.
The newspaper quoted finance expert Le Hong Giang assaying issuing bonds with different terms of maturity not only helpsoptimise the use of borrowed money but also facilitates the creation ofinterest rate curves and improved efficiency of monetary policies.
Thereport cited another finance expert, Huynh The Du, as saying G-bondswith different terms can serve as important instruments for theGovernment to regulate the financial market.-VNA
A report inthe Dau tu (Investment) newspaper said the move stemmed low demand forbonds that have terms longer than five years, which has hindered capitalmobilisation for the State Budget.
Statistics compiled by theministry shows that just 82 trillion VND (3.83 billion USD) worth ofG-bonds with terms exceeding five years were issued in the first half ofthe year, down 26 percent against the same period last year.
Theministry said if its proposal is approved, it would also help enhancethe management of public debt, ensuring that it does not exceed thepermitted 65 percent of the GDP.
The ministry's proposal alsoasks the Government to initiate more measures to boost long-termborrowing at home and abroad to be able to balance the State budget.
Accordingto Resolution 78/2014/QH13 issued by the National Assembly last year,from 2015, the Government can only issue long-term bonds with terms ofmore than five years. The resolution also prohibits short-termborrowings to offset overspending.
The resolution was passed inthe context of widespread concerns over rising public debt. The NationalAssembly decided that it is necessary to tighten Government borrowing.
However,the measure has made it very difficult for the Finance Ministry tomobilise capital for State spending. Many G-bond issues have failed thisyear, and analysts have attributed this to the lack of short-term bondsfor investors to choose from.
The Thoi bao kinh te Sai Gon (SaiGon Times) newspaper recently quoted economists as saying that themeasure was ‘quite unreasonable'. They said that it was the FinanceMinistry's job to calculate how much money the State Budget needs andhow much to borrow. It was also the ministry's brief to define the termsof government bonds that have to be issued to optimise use of borrowedfunds.
The newspaper quoted finance expert Le Hong Giang assaying issuing bonds with different terms of maturity not only helpsoptimise the use of borrowed money but also facilitates the creation ofinterest rate curves and improved efficiency of monetary policies.
Thereport cited another finance expert, Huynh The Du, as saying G-bondswith different terms can serve as important instruments for theGovernment to regulate the financial market.-VNA
