VINACHEM

The revenue of the state budget is not big enough to cover expenses, but Vietnam cannot continue borrowing big money.

At a meeting with voters in Bac Giang province some days ago, chair of the Vietnam Fatherland Front’s Central Committee Nguyen Thien Nhan said Vietnam’s public debts have exceeded 62 percent of GDP, or just 3 percent below the safety line, while government’s debt accounts for over 50 percent.

Phap Luat TP HCM quoted Nhan as saying that Vietnam’s public debt has increased because of global financial crisis.

“The revenue of the state budget is not big enough to cover expenses. Therefore, we have to borrow money to pay old debts. However, we cannot borrow big money anymore,” he said.

“We need to mobilize internal strength for development,” he said.

In fact, the warning about public debt was given by the Asian Development Bank (ADB) in mid-2015.

A report of the bank showed that the government of Vietnam has increased its expenditure and borrowed money to recover the national economy.

The public debts, including government-guaranteed debts, is expected to increase to 62 percent of GDP by the end of 2015.

Foreign debts, mostly long-term preferential loans, have been staying at the threshold of 28 percent of GDP in the last three years, curbed by the increasingly complicated procedures to get ODA (official development assistance) capital.

According to ADB, the domestic capital sources with higher cost would be increasing to 33 percent of GDP, while the debt payment would account for 15 percent of the government’s revenue in 2016.

Therefore, the institution warned that the government needs to control the increase in expenses in order to reduce the budget deficit, commencing from 2016.

Most recently, at the National Assembly’s Steering Committee’s discussion about budgeting on March 7, Minister of Finance Dinh Tien Dung admitted that ‘managing the budget is now just like walking a tightrope’.

Commenting about Dung's statement, Le Cao Doan from the Vietnam Economics Institute, said: “Dung’s words show that the Ministry of Finance is meeting big difficulties in the state budget management.”

“We are running the national economy in the context of financial imbalance, high foreign debts and public debts,” Doan said.

In fact, according to Doan, Vietnam is not the only economy in difficulties. In 2008, the world witnessed a global financial crisis stemming from the US. Vietnam needs to learn how the US and the world escaped the crisis.

“You can absolutely walk on a rope if you are sure you are a good artist,” he commented.

He went on to say that the U.S. restored domestic production. Once production develops, public debts will not be a worrying problem.