Debt owed by provinces and cities is poised to increase steadily in the coming years as the Government will boost its on-lending of foreign loans and reduce budget allocations for projects using official development assistance (ODA) and preferential loans in provinces.

In a report sent to the National Assembly Financial and Budgetary Committee last week, the HCMC government said it expects a steady increase in debt owed by cities and provinces, so they need to enhance debt management to avoid risks.

The HCMC government petitioned the committee to request the Government and the Ministry of Finance to guide and clarify the rights and duties of the provincial departments of finance to better control debt.

HCMC proposed holding more training courses on debt management to help localities strengthen management. The courses should focus on planning, database development, efficiency evaluation and debt portfolio. 

Provinces and cities should develop programs and software to control debt, and regularly update their statistics on borrowing and payment. 

According to the report, HCMC has to pay over VND3.6 trillion (US$163.27 million) in principal and VND1.26 trillion in interest this year.

By end-2016, HCMC’s debt is projected to near around VND21.2 trillion, up over VND3 trillion compared to VND18.07 trillion as of January 1. Of the total, the city plans to issue roughly VND12.5 trillion of bonds, borrow VND2 trillion from the State budget and take VND6.7 trillion from the foreign loans borrowed by the Government.   

HCMC has used loans to fund many key projects, including dredging the Soai Rap River, constructing the East-West Highway and Metro Line No. 1, and improving environmental hygiene, traffic light systems, cityscapes and drainage systems.