Vietnamese lawmakers deny debt ceiling increase, insist gov't control spending

By    October 19, 2016 | 09:55 am GMT+7
Vietnamese lawmakers deny debt ceiling increase, insist gov't control spending
“We should be worried that we are using about 3 dongs to pay back debts for every 10 dongs we make,” said Phung Quoc Hien, the National Assembly’s deputy chairman. Photo by VnExpress

The government wants to borrow more but the legislature is saying no.

Vietnamese lawmakers have refused to raise the government's debt ceiling to fund its budget obligations and debts from the current 50 percent of GDP to 55 percent.

Instead, they said the rule could be loosened by lifting the limit to 53 percent, effective until 2020, after which the limit must return to the current level of 50 percent.

Vietnam’s government debt in 2015 was already over the set limit. It totalled VND2,133 trillion ($95.6 billion) or 50.9 percent of GDP, according to the General Statistics Office.

The National Assembly, Vietnam's legislature, also has a ceiling on public debt at 65 percent of GDP and foreign debt at 50 percent. The government, however, has not proposed to adjust these.

A majority of parliament members insisted that the current debt ceiling - the amount of debt the government can legally owe - is there to keep a lid on government spending.

“We must keep public debt under the safety threshold just like we did from 2011-2015,” said Nguyen Duc Hai, chairman of the National Assembly’s Finance and Budget Committee on Monday.

Official figures show the budget deficit stood at 4.4 percent of GDP in 2011, 5.36 percent in 2012, 6.6 percent in 2013. 5.69 percent in 2014 and 6.1 percent last year.

Phung Quoc Hien, deputy chairman of the National Assembly, said the government is not allowed to use more than 25 percent of its annual budget revenue to meet debt obligations. However, the government went beyond that limit last year by using more than 29 percent of budget revenue to fulfil its debt obligations.

“We should be worried that we are using about 3 dong to pay back debts for every 10 dong we make,” said Hien.

Budget revenue has recently been hit by falling oil prices while fewer opportunities for cheap foreign loans are forcing the government to borrow from private sources at higher interest rates. Meanwhile, increasing pressure to keep GDP growth on target and infrastructure development needs are pushing for more government spending.

The ratio of government debt to national budget revenue increased from roughly 158 per cent in 2010 to nearly 212 per cent in 2014, according to the General Statistics Office.

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