A research work of the International Monetary Fund (IMF) pointed out a growing tendency that the public debts incurred by countries are on the decrease. 

Meanwhile, Vietnam’s public debt keeps increasing, at least until 2019. This is a big challenge to Vietnam which strives to maintain the sustainability of the public debt and the growth of the national economy in the future.

Vietnam’s public debt began increasing sharply in 2009, when the national economy began falling into recession which forced the government to launch economic stimulus packages to revive the production sector.

According to IMF, Vietnam’s public debt increased to 47 percent of GDP in 2009 from 39.4 percent in 2008. By the end of 2012, the figure had increased to 50 percent.

Meanwhile, according to the Ministry of Finance, in 2014, Vietnam’s public debt was at 59.6 percent of GDP and the figure is forecast to climb to 61.3 percent this year end.

A research work of a group of authors from Fulbright Economics Teaching Program (FETP) released in October showed that Vietnam is among the group of countries with highest public debt in comparison with other regional countries with lower average income and some emerging countries.

Vietnam’s public debt has been increasing steadily by 20 percent per annum over the last 10 years, an increase which is much higher than the GDP growth rate during the same period.

FETP’s Do Thien Anh Tuan noted that Vietnam has been following a very loose fiscal discipline over many years.

Citing the story about Can Tho province which plans to build a statue with the total estimated cost of VND188 billion with the state budget, Tuan believes that the major sources that cause public debts are local expenditures.

Tuan noted that the sums of money spent by local authorities to build their head offices are big if compared with the local budget revenue, and that in many cases, poor provinces waste more money than rich localities.

Loopholes in budget allocation 

Official reports showed that 78.1 percent of Vietnam’s public debt is incurred by the government, 20.4 percent is debt guaranteed by the government and 1.5 percent incurred by local authorities.

In fact, the government bears debts instead of local authorities through the subsidy for budget balancing, which explains why the debt burden and risks are not shown in local authorities’ reports.

FETP believes that the local authorities’ behavior of ‘biting off more than one can chew’, spending trillions of dong on head offices and monuments, is a consequence of the unreasonable decentralization scheme. 

NLD