A limit of public debt to no more than 65 percent of the gross domestic product by 2020 and 60 percent by 2030 has been targeted in a national strategy approved on July 27.

Public debt is the debt owed by the central Government and local governments as well as loans guaranteed by the Government for financing national operations.

By 2020, the Government's debt is not to exceed 55 percent of the GDP and borrowing from foreign countries will not be higher than 50 percent of the GDP. By 2030, the correlative figures should be 50 percent and 45 percent.

To meet these goals, borrowing to cover State budget overspending needs to fall to below 4.5 percent of the GDP by 2015, 4 percent by 2020, and 3 percent after 2020.

Prime Minister Nguyen Tan Dung said the strategy is to balance the State budget and investments for socio-economic development in specific periods, to assure efficiency in mobilising and using loans and to maintain the country's financial security.

The nation can issue a maximum of 225 trillion VND (10.82 billion USD) worth of State bonds by 2015, and 500 trillion VND (24.04 billion USD) in 2016-20, to raise funds for developing health care, education and traffic and irrigation works.

It can borrow around 550 trillion VND (26.44 billion USD) maximum by 2020, or an average of 55 trillion VND (2.64 billion USD) per year, to build infrastructure for the industrialisation and modernisation process.

Investment and export credits, locality borrowing, as well as enterprises and credit institutions approaching foreign loans, must be performed reasonably and selectively in accordance with Government targets, Dung noted.

Since "domestic capital is decisive and foreign capital is important", borrowing portfolios "need to be adjusted following a direction of increasing domestic debts and gradually lessening the country's dependence on foreign debt".

By 2020, the value of foreign loans is to fall to below half of that of total Government's debt while the value of official development assistance capital should account for about 60 percent of its total loans from overseas.

Dung urged the country to minimise risks involving currencies, exchange rates and capital liquidity and boost the development of the State bond market. The average term of State bonds should be extended to 4-6 years by 2015 and 6-8 years by 2020, he said.

Dung asked for debt payment responsibilities to be fully performed, noting that there shouldn't be overdue debts to avoid affecting the country's international commitments.

He specified that the Government's debt mustn't exceed 25 percent of total State budget revenue each year while foreign borrowing should be lower than 25 percent of total export value. Foreign exchange reserves also need to be double that of short-term foreign loans annually.

Dung urged the country to speed up the development of the domestic capital market and actively take part in the international capital market, in addition to strengthening risk supervision for national borrowing, especially State corporation debt.

He said appropriate mechanisms for public-private partnership and other investment co-operation models, such as build-operate-transfer, are needed to better mobilise capital from the society for infrastructure development.

These forms should be effectively exploited to gradually replace ODA sources, which are tending to decline, and ease the burden on the State budget, he said.-VNA