VietNamNet Bridge – Minister of Planning and Investment Bui Quang Vinh has underlined the possibility of lifting the public debt limit to have funding for development investments.

Vinh was quoted by Tuoi Tre newspaper as saying at a conference on public investment planning for 2016-2020 in Hanoi on Monday that public debt could rise to 64.9% of the country’s gross domestic product next year and it would be difficult for the Government to issue more bonds to borrow money if this came true.

As the percentage almost reaches the ceiling approved by the National Assembly (NA), the Government needs to review regulations on public debt and suggested adjustments if this is necessary.

Vinh said 65% or 70% of GDP is not as important as solvency because there is a country whose public debt accounts for 200% of its GDP.

Vietnam should loosen the cap on public debt if its solvency is viable, and investments should be channeled to projects which are efficient and implemented by ministries, according to the minister.

The higher public debt ceiling needs approval of the NA and this legislative body should be convinced by good projects, Vinh said.

Vinh suggested each locality propose no more than three projects aimed to fuel economic growth and bring about drastic changes. These planned projects will be categorized in terms of priority and funding before the Government mulls the amount of money it will raise from bonds for submission to the NA for approval.

However, Vinh pointed out the reality that a number of ministries and localities have asked for capital allocations for the next five years which are many times higher than what they can afford to pay.

Vinh was quoted by news site VnExpress as saying that last year the Ministry of Transport sought at least VND20 trillion to use as counter capital for the projects funded by official development assistance (ODA) loans. However, the ministry was able to arrange a mere VND2 trillion and requested the Government to ask the NA’s nod to issue bonds to mobilize the remainder.

“We have a total of VND35 trillion but a ministry asks for up to VND20 trillion. The transport ministry wants VND71 trillion to use as reciprocal capital in the 2016-2020 period, and this is huge pressure,” Vinh said.

Therefore, the planning ministry urged other ministries to adopt new approaches and strictly follow the Prime Minister’s instruction for using reciprocal capital at projects with top priorities given to those to be implemented under the public-private partnership (PPP) format and by ODA loans.

From next year, localities and ministries will have to prepare plans for investment projects in advance, and make clear the number of projects under construction and their combined investments and their debt solvency if they want their projects approved.

To prevent public investment violations, Vinh said local governments and agencies are required to send reports to competent agencies.

Vinh said ministries and localities need to select urgent and key projects for their investment plans and those projects to be completed this year should be prioritized.

SGT