The World Bank (WB) has rated Viet Nam’s overall debt management positively in its 2024 report (Illustrative image/Photo: VNA)

The World Bank (WB) has rated Viet Nam’s overall debt management positively in its 2024 report, citing notable progress in the legal framework, particularly since the enactment of the Public Debt Management Law in 2017, and the establishment of internal processes to enforce it.

Deputy Minister of Finance Tran Quoc Phuong has recently met with WB experts to discuss the results of the 2024 Public Debt Management Performance Assessment (DeMPA) for Viet Nam.

Since 2024, the WB team has worked with Viet Nam’s Ministry of Finance and relevant authorities to evaluate the country’s debt management practices, benchmarking them against international standards and identifying areas for improvement.

The WB highlighted several strengths of Viet Nam, including clear definition of debt management roles, objectives, and borrowing purposes, strong coordination among stakeholders and skilled staff managing debt, high-quality debt management strategy, with regular public debt disclosure, and effective auditing by the State Audit Office of Viet Nam, with reports submitted to the National Assembly and made public.

It recognised Viet Nam’s strong alignment with fiscal and monetary policies, along with structured borrowing and on-lending procedures.

The WB also noted improvements in cash flow forecasting, treasury management, and debt recording, both domestic and external.

An overview of the working session between the Ministry of Finance and WB experts. (Photo: VNA)

However, Lars Jassen, Senior Debt Management Specialist at the WB, proposed several areas for improvement, including more transparent reporting to the National Assembly, lack of specific risk indicators in the annual borrowing plan, and absence of audits for operations, fiscal risk reporting, and debt sustainability analysis (DSA).

Jassen and other experts recommended diversifying funding sources and enhancing the performance of Viet Nam’s debt management agency.

Deputy Minister Tran Quoc Phuong acknowledged the importance of public debt management for Viet Nam’s economic and social development, particularly as the country enters a new growth phase. He emphasised the need for increased capital mobilisation, both domestically and internationally, to achieve economic growth targets while ensuring sustainable long-term benefits.

As preferential financing decreases, raising capital will become more challenging. In this context, the bank’s recommendations are vital for Viet Nam, he said.

He also encouraged continued collaboration between the WB and the Ministry of Finance’s Debt and External Economic Relations Department to further improve debt management.

The DeMPA assessment includes 15 indicators grouped into key debt management functions, such as governance, strategy development, borrowing activities, cash flow forecasting, and risk management. The performance is rated on a scale from A (best practices) to D (requirements not met), with C indicating minimum standards.

Viet Nam’s first DeMPA was conducted in 2011, so the criteria now become outdated. Updating the assessment is crucial for tracking the 2017 Public Debt Management Law’s implementation and assessing progress in debt management practices.