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Chair of the National Assembly’s Finance and Budget Committee Le Quang Manh

On October 23, the National Assembly listened to a report reviewing the mid-term implementation of the national financial and public debt/payment plan for 2021-2025.

Minister of Finance Ho Duc Phoc said in 2021-2023 the government borrowed VND1.32 quadrillion (43 percent of the yearly plan), of which VND1.28 quadrillion was reserved for the central budget.

The loans were mostly from domestic sources, through long-term bond issuance with  interest rates of 12.6-13.92 percent per annum. The capital mobilization, public debt payment, indexes on public debt safety, government loans and guaranteed limits, and loans to local authorities all reached the targets.

By the end of 2023, public debts are expected to reach VND4 quadrillion, or 39-40 percent of GDP.

The government’s debts reached VND3.7 quadrillion, equal to 36-37 percent of GDP, or 1.7-2.7 percent lower than 2021 GDP. It is expected that by the end of 2023, domestic debts will account for 73 percent of the government’s debts (the figure was 67 percent in 2021).

The direct debt payment obligations of the government was 20-21 percent of total budget revenue, a decrease of 0.5-1.5 percent compared with 2021.

Examining the report, the chair of the National Assembly’s Finance and Budget Committee Le Quang Manh said the economic conditions were not good, while the state budget collection growth had slowed down.

The government this year plans to borrow VND604.379 trillion (93.8 percent of the plan). Of this amount, VND589 trillion would be used to pay the principal of the central budget (32.35 percent of total loan structure). The proportion tends to increase in 2024 to 42.4 percent, which shows the need to increase borrowed capital to pay principal.

In addition, there are new loans negotiated and signed in 2022 which have higher interest rates, which pose a challenge and require improvement in loan use efficiency.

The NA’s Finance and Budget Committee has predicted that the public debt in 2024 would be 39-40 percent if GDP grows well. However, the borrowed amount tends to increase and the ratio of the government’s direct debt payment to the state budget collections is estimated at 24-25 percent in 2025, nearly hitting the ceiling level.

Regarding the 3-year budgeting plan, Phoc said with the budget revenue and expenditure in the last three years, the government plans to see the 5-year total budget revenue (2021-2025) climb to VND8.4 quadrillion, while the 5-year expenditure would be VND10.14 quadrillion.

Luong Bang