Public debt growth due to missed GDP target: minister
"The 2011-15 GDP growth was only 5.91 per cent whereas the set target was seven per cent,” he added.
Although the economic growth rate did not reach the designated target, Vietnam had to mobilise capital for investment in transport infrastructure, social security and balance its budget in items supported by overseas assistance, he said.
The minister spoke during a debate in the National Assembly Standing Committee (NASC) about amendments to the Law on Public Debt Management.
Dũng said after six years of implementation, the law had contributed to mobilising capital to offset State budget overspending, and created investment resources for the economy’s key sectors through the re-lending of foreign loans by the Government and through Government guarantees for domestic and foreign loans.
But given the country’s international integration and the changes in the legal system, many articles of the law were no longer relevant and need to be adjusted, he said.
The majority of NA deputies agreed on the need to revise the law, and also discussed the scope of public debt and which agency should manage the public debt.
In response to a question raised by Chairwoman of the National Assembly’s Justice Committee, Lê Thị Nga, on the calculation of public debt and the reason for its rapid increase in recent years, the Minister of Finance blamed weak management.
When questioned about whether the debts of State-owned enterprises should be subject to the Law on Public Debt Management, Dũng said the law shouldn’t include state-owned companies. The ministry defines public debt as government debt, government-guaranteed debt and local-government debt, as regulated by the current law, he said.
According to Dũng, as SOEs are one-member limited company, they have to bear responsibility for the borrowed capital.
"If they fail to pay the debt it would be dissolved in accordance with the law on bankruptcy," he said.
Many NA deputies agreed with Dũng’s opinion, however, some of them expressed their concern over the consequence of excluding SOE debts.
Nguyễn Văn Giàu, head of NA’s External Affairs Comittee, said bad debts of many credit institutions would increase sharply because SOEs were their biggest customers, and many of them were in difficulties.
Who’s in charge
Regarding to the tasks and authoritiy of agencies in public debt management, NA deputy chairman Phùng Quốc Hiển said it was time to debate regulations relating to guarantees and re-borrowing of foreign loans by the Government.
Many corporations could not repay the debt although they were backed by the government, Hiển said.
To settle the above-mentioned problem, the Finance and Budget Commitee proposed that the Mininstry of Finance be the sole agency responsible for land and debt payments rather than many agencies currently managing public debts, leading to loose management and the rapid growth of public debt, the committee said.
Đào Quang Thu, Deputy Minister of Planning and Investment didn’t agree with the committee’s proposal, saying that the current management mechanism was suitable to the country’s economic and political mechanism and legal system, creating a mutual supervisory mechanism between ministries.
Currently, the debt management is shared by the Ministry of Finance, the Ministry of Planning and Investment and the State Bank of Vietnam.
Deputies suggested that inadequacies in mobilising government loans, re-lending and guarantee conditions should be improved and tightened to ensure the efficiency in the use of capital and ensure debt security in accordance with the policy of the State.
The NASC also debated the revision of the Foreign Trade Management Law.
Foreign trade law
Six amendments to the draft Law on Foreign Trade Management were discussed by the NASC on March 20.
The committee agreed that the law should clearly regulate the authority and management responsibilities of the Ministry of Industry and Trade (MoIT) and concerned ministries and sectors on foreign trade.
It should also identify roles and divide management responsibilities on foreign trade for local authorities at all levels, deputies said.
On the issue of managing cross-border trade between countries that share borders, Vũ Hồng Thanh, Chairman of the NA Economic Committee said that the trading conducted at sea by border residents have long been regulated by the law.
However, its provisions on cross-border trading and commodity exchange at sea can only be applied to residents on either sides of the border and not to traders, he said.
Traders that conduct border trade must comply with import and export regulations, he added.
Direct trading conducted between traders at sea without completing necessary procedures as regulated will be considered smuggling, Thanh said. They will be dealt with based on anti-smuggling regulations and those covering illegal transportation of goods across borders, he said.
On developing foreign trade through trade promotions, the Chairman agreed to not regulate the establishment of a Vietnamese trade promotion organisation in foreign countries under Article 108.
A new clause will be added to the article that will have the State encouraging the establishment and involvement of social, occupational and economic organisations and associations in trade promotion activities in foreign countries, he said.
Nguyễn Thuý Anh, chairwoman of the NA’s Social Affairs Committee requested the law’s drafting committee to continue reviewing it to ensure that it is compatibile with other legislation.