Leaders of the Ministry of Finance discuss the implementation of debt financing activities between Vietnam and ADB. (Photo: Vietnam+)
Hanoi (VNA) - On November 9, Deputy Minister of Finance - Vo Thanh Hung had a meeting with Asian Development Bank (ADB) Country Director in Vietnam Shantanu Chakraborty.
Speaking at the meeting, the leader of the Ministry of Finance shared that the implementation of debt financing activities between Vietnam and ADB in the past 1-2 years has slowed down. However, this is a general trend in Vietnam's ODA borrowing and foreign funding activities.
Deputy Minister Vo Thanh Hung commented that the international financial market has seen complicated fluctuations in recent times. Developed countries continuously adjust interest rates to curb inflation. Meanwhile, Vietnam is nearing the stage of accessing floating capital from international organizations. Accordingly, Vietnam had to access interest rates that were relatively high and close to market conditions. On the other hand, exchange rates have fluctuated greatly in recent times and caused Vietnam's borrowing costs to increase.
In addition, the Deputy Minister shared that the two provinces of Quang Tri and Phu Yen are in the process of completing procedures to adjust investment policies to sign the Negotiation Minutes. After the two provinces complete this procedure, the Ministry of Finance and ADB will sign the official Negotiation Minutes. On that basis, the Ministry of Finance reports to the Government to submit to the President for approval of signing the Loan and Aid Agreement for the two projects.
Vietnam's public debt to GDP ratio is about 38%-39%, which shows that there is still room for debt accumulation. (Photo: Vietnam+)
In the long term, Deputy Minister Vo Thanh Hung said that Vietnam will focus on prioritizing the implementation of large-scale investment projects. For small-scale projects, Vietnam prioritizes the use of domestic capital. For economic development, domestic capital is not enough, and it is necessary to mobilize external resources, including preferential capital from international organizations.
Deputy Minister Hung also mentioned that in addition to preferential capital support, Vietnam hopes the ADB will continue to pay attention to supporting staff capacity improvement for Vietnam's specialized agencies.
Appreciating Vietnam’s achievements in a difficult global economic and financial context, Mr. Shantanu Chakraborty congratulated the Government of Vietnam for the highest growth rate in the ASEAN region. Inflation is under control and there is ample fiscal space to increase borrowing when required.
ODA projects that want to be implemented will have to comply with Vietnamese law and donors' regulations. (Photo: Vietnam+)
Regarding the implementation of financial activities between the Ministry of Finance and ADB, Mr. Shantanu Chakraborty also admitted that ADB's lending interest rates are not competitive. He expressed his expectation that developed economies will reduce interest rates to control inflation, thereby reducing lending interest rates.
According to the ADB official, Vietnam has key national projects and capital mobilization is urgent and cannot wait until interest rates decrease. Therefore, ADB is ready to accompany Vietnam. The ADB is in fact actively coordinating with a specialized agency of the Ministry of Finance (Department of Debt Management and Foreign Finance) to find solutions to clear bottlenecks to the goal of mutual benefit./.
