Government passes 2016-2018 debt management program
VGP – The PM has ratified the 2016-2018 medium-term debt management program, targeting to keep public debt (government debt, government-guaranteed debt and local government debt) at no more than 65% of gross domestic product (GDP).
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The common goals of the program are to organize the mobilization of loans at an acceptable cost and risk level, suiting the need for state budget balance and socio-economic development in each period; to ensure the adequate allocation and use of loans as well as solvency; and to maintain the country’s public debt, government debt and foreign debt indicators at a safe level, ensuring the national financial security and accordance with Viet Nam’s conditions and international practices.
Government guarantees to be strongly reduced
Government guarantees will be strongly reduced, oriented towards limiting the maximum quota of bond issuance guarantees at an equivalent level to the annual principal repayment liability for the bond issuance of the Viet Nam Development Bank and the Viet Nam Bank for Social Policies, and limiting the quota of net capital withdrawal at US$1 billion per year for the foreign debts which have been granted with government guarantees and are under disbursement.
The issuance of new government guarantees for domestic and foreign loans will be temporarily halted, while the list of priority programs and projects considered for government guarantees will be reviewed, in order to build the government guarantee issuance quotas for the 2016-2020 period and annually, aiming to ensure debt safety targets within the range approved by the National Assembly.
In regards to local government debt, the overspending and debt quotas of local governments will be controlled in line with the 2015 Law on State Budget, with the local budget overspending at about VND6 trillion in 2017 and VND11.1 trillion in 2018.
The quota for foreign commercial loans of businesses and credit institutions by self-borrowing and self-payment is around US$5.5 billion per annum. Efforts will be continuously exerted to closely control the country’s outstanding short-term foreign debt, with a maximum annual growth rate of 8-10%.
Resources will be proactively arranged to fully fulfill the government’s debt repayment liability, avoiding the occurrence of debt overdue that might possibly influence the government’s international commitments.
By Vien Nhu
