Minister of Finance Dinh Tien Dung expressed concern over the rising burden of public debt and the State budget deficit, saying public debt is fast approaching the ceiling.

Speaking at a National Assembly (NA) discussion on the draft of the amended Law on Public Debt Management on May 30, Dung said this year’s gross domestic product (GDP) growth rate is estimated at 6.2%, way below than the Government’s target of 6.7%. Last year, GDP grew 6.21%.

“According to the Law on State Budget, expenditures must be slashed if budget collections are below target. But in recent years, we’ve failed to play by the rules and have even accelerated spending, leading public debt to balloon,” the minister said.

NA Chairwoman Nguyen Thi Kim Ngan, meanwhile, said the ministry would have found it hard to restructure public debt if the lawmaking body had not been determined.

In the past the Government usually took out loans with terms of one to two years at high interest rates. Due to this pressure, the NA disallowed for Government loans of less than five years.

Therefore, the ministry has since been able to restructure Government bond coupons and tenors, easing the pressure from public debt, she said.

Deputy Tran Quang Chieu from Nam Dinh Province asked the Government to determine those responsible for providing guarantees for huge loans.

In the current economic conditions, the GDP growth target might be missed, so public debt could exceed the ceiling anytime soon. Government debt has also surpassed the upper limit, Chieu said.

Deputy Tran Dinh Gia from Ha Tinh Province said many State-owned enterprises have made huge losses due to poor performance. Therefore, he noted, it is dangerous to take out foreign debts for such loss-making businesses as the Government will eventually pay the debts.

According to the ministry, public debt is soaring. At the end of 2015, foreign debts owed by the Government surged 6.5 times compared to 2001, with those from the World Bank (WB) shooting up 11.5 times to VND274.2 trillion, those from the Asian Development Bank (ADB) leaping 20.3 times to VND151.1 trillion and those from Japan surging 6.8 times to VND243.9 trillion.

Between 2010 and 2016, official development assistance (ODA) and preferential foreign loans hit nearly US$36.6 billion, of which nearly US$32.8 billion was disbursed.

Ending 2016, the ratio of public debt to GDP was 63.7%, that of Government debt to GDP 52.6% and that of foreign debt to GDP 44.3%. The Government’s total debt obligations made up 14.8% of total State budget revenues.

SGT