Scene of the conference on reviewing the work in 2021 and deploying tasks for 2022 of the Department of Debt Management and External Finance

Public debt in 2021 is about 43.7% of GDP

Speaking at the Conference, Mrs. Nguyen Xuan Thao, Deputy Director of the Department of Debt Management and External Finance, said that in 2021, the Department's work achieved some outstanding results.

First of all, the Department has ensured the consultancy for developing policies and regimes on quality. Along with that, the unit chaired for developing and completing plans, strategies, visions, medium-term orientations on public debt, borrowing, debt repayment, on-lending and government guarantees for the 2021-2025 period.

From that, ensuring the plan is consistent with the fiscal policy, contributing to the successful implementation of the fiscal policy in the 2021-2025 period; developing annual loan and repayment plans in a timely manner in order to ensure public debt management and other activities in the whole of 2021-2025 such as borrowing, debt repayment, on-lending and government guarantees.

The Department of Debt Management and External Finance has also been proactive in capital mobilization. Accordingly, the unit has advised on signing 12 specific loan agreements with a total value of US$958.27 million and completed negotiations or technical exchanges on 11 agreements of other loans with a value of US$924 million.

At the same time, they also advised submitting to the Ministry for amending and extending 22 specific loan and framework agreements. The result of capital mobilization demonstrated the Department's great efforts in the context of the Covid-19 pandemic.

In 2021, the Department has drastically accelerated loan disbursement. As of the time of reporting, the cumulative disbursement of ODA loans and foreign concessional loans under the public investment expenditure estimate of the central budget is estimated at VND13,795.28 billion, equaling 26.76% of the plan. In particular, the additional target for the local budget achieves VND8,236.86 billion(reaching a rate of 23.59%), disbursement of ministries and sectors is VND5,558.42 billion (reaching a rate of 33.41%).

In addition, the foreign debt repayment and management of the Accumulated Fund for Debt repayment have complied with the regulations; strengthened the management of on-lending; the issue and management of Government guarantees continue to be strictly controlled following Resolution No. 07-NQ/TW dated November 9, 2016 of the Politburo.

Mrs. Thao said that it was expected that by the end of 2021, all debt targets would be within the safety margin approved by the National Assembly. For example, public debt was about 43.7% of GDP; Government debt was about 39.5% of GDP; the national external debt was about 39.0% of GDP; the Government's direct debt repayment obligation compared with state budget revenue was less than 23%; the indicator of national foreign debt repayment obligations compared to the export turnover of goods and services (excluding short-term principal repayment) was about 6.3%.

Furthermore, Thao said that in 2022, the Department proposed six groups of tasks to implement the unit's work program, including planning and risk management tasks; a group of tasks on raising capital; disbursement; task group of guarantee management and on-lending; group of aid capital management; building databases, upgrading information technology infrastructure.

Effective management of ODA and foreign loans

Speaking at the conference, Deputy Minister Tran Xuan Ha said that, in the past year, the Department of Debt Management and External Finance had made great efforts to overcome difficulties and successfully complete the working program registered with the Government and leaders of the Ministry, achieving comprehensive results in many aspects.

Reviewing the major working contents of the Department of Debt Management and External Finance, the Deputy Minister said that, first of all, the Department has made efforts to advise and help the Ministry to improve mechanisms and policies as well as to detect problems in the management process. For example, proactively reporting to the Government to amend Decree 97/2018/ND-CP on on-lending of ODA loans and foreign loans which help to solve many problems.

At the same time, the unit has actively participated with the Ministry of Planning and Investment in amending and promulgating a new decree to replace Decree 56/2020/ND-CP on the management and use of ODA loans and preferential loans from foreign sponsors, in which there are more completed processes, procedures, authority and financial mechanisms.

Secondly, the Department has actively carried out debt management through debt instruments, accordingly, developing a debt strategy in 2021-2030 period, developing a plan for medium-term public debt repayment in the 2021-2025 period, and a medium-term debt program in three years, on-lending limit  in 2021.

On that basis, the Department advised the leaders of the Ministry to manage public debt effectively and sustainably. The public debt/GDP index, CP debt/GDP ratio as well as the debt payment ratio on the budget have improved compared to last year.

“This created room for fiscal policy to have the opportunity to continue implementing the economic stimulus package in the context of the Covid-19 pandemic. This was also highly appreciated by credit organizations," Deputy Minister Tran Xuan Ha said.

Along with that, the Department has coordinated with competent units and localities to disburse ODA and foreign loans. Up to now, the disbursement rate is still low. Accordingly, it is necessary to review the process, settle the withdrawal application, control spending to further strengthen disbursement.

The Deputy Minister also noted that in 2021, the Department has made full payment and in a timely manner for the Government's debt repayment obligations.

Besides the achieved results, the Deputy Minister also said that, through the supervision of the Central Inspection Committee, there were still limit ations in the management of ODA and foreign loans.

The Deputy Minister requested that the Department should improve this, especially to effectively manage ODA and foreign loans, which must be considered a key task of the Department of Debt Management and External Finance in 2022.

In the next year, the Deputy Minister asked the Department of Debt Management and External Finance to review the negotiation of framework agreements and specific loan agreements, in which, besides terms and conditions, it was important to note that loans with binding conditions such as conditions on limit ed bidding and tax.

Secondly, conducting an assessment of programs and projects closely, clarifying the essentials of projects, and ensuring effective financial mechanisms. It is necessary to coordinate with relevant units such as the Investment Department, the State Budget Department, the Tax Policy Department to consult and ensure the signed agreements are effective. The Deputy Minister emphasized that, if necessary, there would be an internal process to assign responsibilities.

At the same time, the Department of Debt Management and External Finance needs to coordinate with other ministries and sectors to quickly disburse capital and remove obstacles of ministries, branches, localities and project owners.

The Deputy Minister also requested the Department of Debt Management and External Finance to summarize and report to the leadership of the Ministry so that the Ministry could report to the competent authorities about the guarantees, loans and on-lending that are facing problems for handling measures; reviewing to pay the debt on time, especially provisional debt; continue to research and innovate the management of non-refundable aid; assess the ability to mobilize more resources for the stimulus package.

Receiving the direction of the Deputy Minister, Mr. Truong Hung Long, Director of the Department of Debt Management and External Finance, said that the Department would review to complete the working program in 2022 to meet the requirements of general management reform of the sector and the field as well as the direction of the leadership of the Ministry.