|
Public debt management draft law draws controversy
Policy makers are wrestling with the issue of whether State-owned companies’ debts should be subject to the law on public debt management, in addition to who should manage public debt.
Under the draft law, public debt would include Government loans, loans guaranteed by the Government and loans given to local government authorities. However, it would exclude debts incurred by State-owned enterprises.
The World Bank said public debt should include State-owned company debts, said deputy chairman of the National Assembly’s Economic Committee Vu Viet Ngoan.
Chairman of the NA Committee for Finance and Budget Phung Quoc Hien said international financial institutions wanted loans to be guaranteed by the Government so as to mainly ensure their benefits.
However, Hien said such a regulation would make debt management more complex and make the State liable for State-owned company debt.
State-owned companies must take responsibility for their debt. In the situation where the firms were unable to pay off their debts, they would be declared bankrupt in line with the law on bankruptcy, Hien said.
National Assembly Deputy Chairman Uong Chu Luu suggested that State debt should be divided into two kinds. If the firm was investing in a key project in the country the Government should guarantee the debt, Luu said.
"Therefore, it is not necessary to exclude State-owned companies’ loans borrowed from foreign countries from being guaranteed by the State," Luu said.
Who manages debt
Under current regulations, the Ministry of Finance (MoF), the Ministry of Planning and Investment (MPI), and the State Bank of Viet Nam (SBV) are permitted to function as debt managers.
However, the draft law states that the MoF will be the only manager, while the MPI and SBV are the MoF’s co-operator. Localities are not allowed to negotiate and borrow money from abroad. The Ministry of Finance will come forward and sign borrowing contracts, then lend to localities.
The SBV deputy governor Nguyen Van Binh agreed that the MoF would act on behalf of localities to borrow money, but that the SBV would take responsibility for acquiring the loans from foreign institutions such as the World Bank, the International Monetary Fund, and the Asia Development Bank then hand them over to the MoF to manage.
Head of the Finance and Monetary Department under the Ministry of Planning and Investment (MPI) Le Quoc Ly said that the MoF was assigned the task of managing public debt, which does not mean that the ministry would do everything related to public loan management.
The MPI will continue to be in charge of working out a long-term loan strategy, which is submitted to the Government for approval, in addition to building a system of standards to control public loans and the Government’s borrowing plans each year.
"Currently, the MPI is tasked with calculating and adjusting loans such as Government and State-owned debts based on macro-economic norms like gross domestic product (GDP) and international balance of payments," said Ly.
"The Planning and Investment Ministry advises the Government on how much it can borrow, in what form and from which country."
However, the law must clearly set out the functions and responsibilities of the three authorities to avoid overlap and improve efficiency, he added.
"Government loans are used to boost investment and increase income and welfare, but younger generations are those who take responsibility for paying the debt," said Minister of Finance Vu Van Ninh.
The public debt management law would improve the ability of citizens to supervise the Government’s activities, he said.
Up to December 31, 2007, public debt including Government and local government agency loans accounted for 40.7 per cent of the country’s gross domestic product. This rate was within the safe limit set in Viet Nam’s orientation of finance development up to 2010 approved by the Prime Minister, Ninh said.
Taking out loans with foreign countries currently comes under Decree No 134/2005/ND-CP on management of borrowing and paying foreign loans, and Decree No 131/2006/ND-CP on management and usage of official development aid.
The draft law consists of eight chapters and 53 articles, and will take effect on January 1, 2010.
VNS
|
