Public debt strategy until 2030

1. Perspective
The formulation and implementation of the Public Debt Strategy for the 2021-2030 period is associated with the following six key points of view:
a) Stick to and concretize the key viewpoints, goals and tasks set out in Resolution 07-NQ/TW dated November 18, 2016 of the Politburo on policies and solutions to budget restructuring. the state, managing public debt to ensure a safe and sustainable national finance; Documents and Resolutions of the XIII Party Congress. Public debt management always ensures the highest interests of the nation - the nation, only spending within the economy's ability and only borrowing within its ability to repay, borrowing must ensure national financial security. In the context of a new situation with many difficulties and challenges, public debt continues to be a lever for socio-economic development, creating a driving force for sustainable growth. In mobilizing, continue to implement the principle that domestic loans are basic, decisive, and a close and effective combination with foreign loans is important.
b) Strengthen management of finance, state budget and public debt according to the medium-term plan, ensuring synchronization and consistency between financial plan and plan for public investment and plan for borrowing and repaying public debt. Public debt resources need to focus on offsetting the State budget deficit for socio-economic development, borrowing according to capital needs.
c) Strict public debt management is the task of all branches, levels and capital-using units; improve the efficiency of loan mobilization, allocation and use, ensuring the leading role of the central budget and the proactive role of the local budget.
d) Capital mobilization must be carefully calculated in terms of debt repayment capacity of each budget level and each borrower. Arrange payment and repayment of debts in full and on time, so that overdue debt does not affect the Government's commitments and the national credit coefficient.
Developing capital mobilization channels in parallel with debt portfolio restructuring to increase sustainability.
e) Enhance digital transformation in public debt management; ensuring publicity, transparency and accountability of all levels in the use of loans and repayment of public debts.
2. Overall goal
Organize loan mobilization to meet the needs of the state budget in each period with reasonable borrowing costs, suitable to the level of risks of the loan, ensuring debt repayment ability; maintaining public debt and government debt indexes at safe levels, controlling foreign debt, ensuring national financial security; promote the development of the domestic capital market; associated with the goals and tasks of the 10-year socio-economic development strategy 2021-2030.
3. Specific goals
a) Period 2021-2025
- Control the state budget deficit target approved by the National Assembly in the state budget estimate and the 5-year national financial plan for the 2021-2025 period, ensuring debt safety indicators including ceiling , the threshold within the limits approved by the National Assembly.
b) Expected to 2030.
- Public debt does not exceed 60% of GDP, government debt does not exceed 50% of GDP.
- The Government's direct debt repayment obligation must not exceed 25% of the total state budget revenue.
- The country's external debt does not exceed 45% of GDP.
4. Orientation to mobilize and use loan capital
a) Regularly assess the impacts of loans on public debt, government debt and debt repayment obligations. In annual state budget management, it is necessary to control simultaneously the ratio of state budget overspending and the ratio of direct debt repayment from the budget, ensuring it is within the allowable threshold.
b) Regular issuance of Government bonds with standard terms, focusing on long terms of 5 years or more, at the same time flexibly issuing terms of less than 5 years, issuing foreign currency bonds on domestic market to meet the demand for capital mobilization and realize the target of developing the Government bond market. Issuing international bonds to offset central budget deficit for development investment and to restructure government debt when market conditions are favorable.
c) Focus on disbursing all signed foreign ODA and concessional loans by the end of 2020. The mobilization of new foreign loans will focus on a few key areas to ensure maximum promotion. economies of scale; Prioritize investment in projects that directly promote growth associated with sustainable development, have spillover effects such as climate change adaptation, environmental quality improvement, education, health care and technology. Formulate a number of public investment programs to implement a number of important and key projects and works of great impetus and pervasiveness, and solve national and regional development issues and regional linkages, prioritized goals instead of a separate, distributed project approach; increase the proportion of foreign loans to support the budget to increase the initiative in the management and use of loans.
d) Manage local government debt within the scope of local budget overspending approved by the National Assembly, ensuring within the loan balance limit according to the State Budget Law.
Strictly control contingent debt obligations, ensuring the debt repayment source is guaranteed by the Government; manage guarantees, ensure compliance with regulations, be effective within the guarantee limit, focus on prioritizing capital sources to guarantee key national programs and projects, approved by the National Assembly, the Government approve investment policy, the Prime Minister approves investment. Control that the growth rate of Government guarantee loans does not exceed the GDP growth rate of the previous year. Select a number of infrastructure development projects with pervasive nature, capable of generating revenue for debt repayment for the Government to re-lend from ODA loans or foreign concessional loans.
e) Strictly control foreign debt by self-borrowing and self-payment of enterprises and credit institutions, ensuring that the national foreign debt quota is within the allowable limit. Renovate the method of national foreign debt management to suit the nature of short-, medium- and long-term loans, the nature and level of risks of each target group. Research and improve institutions to apply capital flow control measures in self-borrowing and self-paying foreign debt management to be in line with international practices.
5. Tasks and implementation solutions
a) Improve institutions, policies and debt management tools.
The improvement of the institutional system, policies and debt management tools will be done through two phases, specifically:
- Period 2021-2025:
+ Continue to review Laws and Decrees, propose amendments and supplements to improve institutional regulations, functions and tasks of the Government, the Prime Minister, the Ministry of Finance, the Ministry of Planning and Investment. Investment, the State Bank of Vietnam, local authorities ensure consistency with the provisions of the Law on Public Debt Management 2017. Organize research, propose solutions to unify the function of public debt management with public investment management in the overall state budget to improve efficiency.
+ Organize the implementation of debt instruments (strategy and plan for borrowing and paying public debt for 5 years, public debt management program for 3 years, annual plan for borrowing and paying public debt) as a basis for implementing business activities on mobilizing and using loan capital for development investment in each specific period.
+ Review and evaluate the implementation of the 2017 Law on Public Debt Management, report to the Government on supplementing, amending and completing regulations to effectively implement the Law on Public Debt Management and supplement sanctions. in order to improve the debt payment responsibility of the guaranteed, not to convert the enterprise's debt obligations into the State's debt obligations; study and supplement regulations on the risk management framework for the Government debt portfolio in line with international practices.
+ To study, summarize and evaluate the implementation of foreign debt limits in the private sector, report to the Government to propose additional policies, amend or report to the National Assembly to amend regulations on supervision. , manage foreign debt by self-borrowing and self-payment of enterprises and credit institutions to suit the country's development conditions, the nature of the loan sources and the borrowers.
- Period 2026-2030:
+ To summarize and evaluate the 2017 Law on Public Debt Management, report to the Government to submit to the National Assembly to supplement and amend the Law on Public Debt Management, perfecting the institution to effectively implement debt management in accordance with international practices.
+ On the basis of summarizing and evaluating legal regulations on methods of self-borrowing and self-paying foreign debt of enterprises and credit institutions by the limit, according to the guidelines of the competent authority to separate To manage foreign debt by self-borrowing and self-repaying with foreign debt in the public sector, the State Bank of Vietnam shall coordinate with ministries and branches to study and report to competent authorities for adjustment or promulgation of policy implementation regulations, manage self-borrowing and self-repaying foreign debt in order to control capital flow according to the set target of the 2026-2030 period.
+ The State Bank of Vietnam submits to the Government to complete the legal framework and organizational model on financial stability to implement macroprudential policies.
b) Implement modern debt management tools and measures
- Actively and flexibly combine debt instruments, domestic and foreign mobilization channels depending on market conditions to ensure that the Government debt portfolio meets the set risk management objectives.
- Implement the Government debt management tool according to regulations in line with practical requirements, associated with state budget management, state treasury management, ensuring efficiency, safety and liquidity of the budget.
- Continue to issue government bonds in association with restructuring public debt and government debt in the direction of focusing on issuing government bonds with a term of 5 years or more when the market is favorable to both mobilize capital for the state budget. The government has just extended the average maturity of the government bond debt portfolio.
- Based on active market conditions, perform debt restructuring operations (repurchase, swap, use of derivatives and other operations) at an appropriate cost to restructure the Government's domestic and foreign debt in a safe and sustainable direction, contributing to the relaxation of principal debt repayment obligations over the years, reducing liquidity pressure on the state budget.
- For the increasing pressure of the Government to pay direct debt in the medium and long term, consider adjusting mechanisms and policies to allocate part of the state budget to pay the principal, thereby reducing the debt burden. For loans, the debt instrument mobilized in the coming time needs to be calculated to ensure an even repayment schedule, so that the repayment obligation is not concentrated on a number of years.
- Studying international practices, proceeding to apply the statistical method of external debt of the public sector according to the principle of the place of residence of the creditor in order to be more consistent with international standards; at the same time, monitor foreign debt targets according to foreign currency criteria to manage exchange rate risks. The report separates the external debt of the public sector (Government debt, Government guaranteed debt) and self-borrowed and self-paid debt of enterprises and credit institutions.
- Apply measures to strengthen capital flow control in parallel with control by net withdrawal limit, including:
+ Research and submit to competent authorities for permission to apply a number of supplementary measures to the management of foreign debts of enterprises and credit institutions in the form of self-borrowing and self-payment in order to strictly control foreign borrowing activities, short-, medium- and long-term foreign loans: apply limits on foreign loans for each group of enterprises; request the implementation of measures to prevent risks to foreign loans in foreign currencies; improve the reporting and sanctioning mechanism in line with short-, medium- and long-term loan control measures; control the borrowing of credit institutions through safety ratios...
+ Research and submit to the competent authorities the possibility of applying supervisory measures through safety indicators in parallel with the adjustment of the legal framework on self-borrowing and self-repaying foreign debt management in the direction of non-applicability, self-borrowing and self-pay debt ceiling limit of enterprises and credit institutions.
c) Effectively mobilize, manage and use debt
- The source of loan capital for development investment must be strictly controlled in terms of objectives, investment efficiency, debt repayment plan and the impact of the total loan on the outstanding public debt, Government debt and payment obligations.
- Report to the National Assembly and the Government for consideration and approval of a number of public investment programs to implement a number of important and key projects and works that are dynamic, have great impact and solve problems of national and regional development... Based on market conditions and the ability to mobilize from development partners, proactively and flexibly choose appropriate loan sources, arrange sufficient capital plans to completed in each period of 2021-2025 and 2026-2030.
- Research and propose solutions to mobilize resources in domestic and international capital markets to implement socio-economic recovery and development programs.
- Strengthen the management of fiscal risks of the central and local budgets arising from borrowing activities on on-lending, attach the initiative to local borrowing decisions with enhanced debt repayment responsibility, attach responsibility debt repayment with the degree of autonomy of public non-business units.
d) Continue to increase publicity and transparency in public debt mobilization, management and use, raise the national credit rating
- Develop and submit to the Prime Minister for approval and implement the Project on Orientation to improve the national credit rating to 2030.
- Develop and implement strategies to contact and maintain relationships with domestic and international capital markets.
- Review and systematize reporting regimes, improve periodic information disclosure on the nation's public and external debt, including online channels.
d) Developing the domestic financial and capital market
- Diversify the issuance tenor, including less than 5 years, ensure the average issuance term within the scope permitted by the National Assembly, and at the same time meet the needs of investors, contributing to the formation of standard yield curve with full reference maturities for debt instruments as well as other economic sectors.
- Developing a diversified system of investors in the Government bond market, giving priority to the development of long-term investors such as investment funds and a system of voluntary supplementary pension funds; attract foreign investors to participate in long-term investment in the market. Renovating the investment mechanism of Vietnam Social Insurance according to Resolution No. 28-NQ/TW dated May 23, 2018 of the 12th Central Executive Committee on reforming social insurance policies.
- Develop a variety of products and goods on the market to meet the needs of investors; develop green government bond products to mobilize capital for environmental protection projects for sustainable economic development. Research to put Government bonds in the basket of international bond indexes to attract more investment funds and foreign professional investors.
e) Regarding contingent liabilities
Strictly control the provisional debt obligations of the state budget from government guarantee activities, on-lending of foreign loans. Research and propose additional regulations on risk provisions in the state budget for debt obligations arising from public-private partnership projects, government guarantees.
g) Organizational apparatus, application of information technology
Improve the organizational structure, improve the quality of public debt management staff; innovate public debt management methods on the basis of information technology application and digital transformation, approaching the international advanced debt management model.
Focus on forming a professional and modern public debt management agency according to international practices in accordance with the direction of Resolution No. 07-NQ/TW dated November 18, 2016 of the Politburo; raise the level of civil servants in charge of debt management; consolidate and strengthen the application of information technology in controlling and disbursing foreign loans; modernize facilities in service of debt management; building database, statistics on debt. Ensure funding from the on-lending fee and Government guarantee to perform the task of public debt management in accordance with the Law on Public Debt Management 2017.
Unify the implementation of local government debt management, clearly define the functions, tasks, powers and responsibilities of local government agencies in local government debt management to ensure transparency and efficiency; strengthen the capacity of local government debt managers to meet the requirements of monitoring, assessment and risk management; building and connecting the local government debt information system to ensure updating, serving the management according to the annual debt limit and local budget overspending; equipped with tools to analyze and evaluate debt portfolios and debt structuring of local governments, towards the application of risk prevention tools, to ensure the sustainability of local government debts.
h) Inspection, examination and supervision
Strengthen inspection, examination and supervision of compliance with the law on management and use of public loans. Strengthen the effectiveness and efficiency of the internal supervision system, risk control framework and internal audit activities.
Promote decentralization of powers, improve the responsibility of local governments in public debt management; education, raising the sense of responsibility of the leader. Personalization of responsibility goes hand in hand with increased inspection and supervision. Tighten discipline, discipline; reward and discipline in a timely and strict manner.
6. Implementation organization
a) Stages of Strategy implementation
The public debt strategy for the period 2021 - 2030 is implemented in 2 phases, specifically as follows:
- Phase 1: implementing the National Financial Plan, the Five-Year Plan on borrowing and repaying public debt from 2021 to 2025 according to the Resolutions of the National Assembly; formulating and implementing three-year public debt management programs and annual plans for borrowing and repaying public debt;
- Phase 2: formulating and implementing the national financial plan, the five-year plan on borrowing and repaying public debt, 2026-2030; three-year public debt management programs and annual public debt repayment and borrowing plans.
b) Resources to implement the Strategy
Funding for the formulation and implementation of the contents of the Public Debt Strategy project shall be allocated from the state budget and other lawful capital sources in accordance with law.
7. Responsibility to organize and implement the Strategy
7.1. The Ministry of Finance is responsible for:
- To assume the prime responsibility for, and coordinate with ministries, ministerial-level agencies, government-attached agencies and People's Committees of provinces and centrally-run cities in organizing the implementation of the public debt strategy; directing the implementation plan of the contents of the Public Debt Strategy in each period.
- Improve institutions, policies and debt management tools; proactively and flexibly combine debt instruments, domestic and foreign mobilization channels depending on market conditions, perform debt restructuring operations at an appropriate cost to ensure the Government's debt portfolio meets the needs of the Government, risk management objectives; mobilizing, allocating, using government loans and repaying loans, managing the issuance of government guarantees, guiding and monitoring local governments' borrowing and debt repayment.
- To assume the prime responsibility for, and coordinate with relevant agencies in, macro-monitoring of public debt, and coordinate with agencies in periodically and irregularly inspecting the mobilization, allocation and use of public debt and repayment of public debt.
- To assume the prime responsibility for, and coordinate with concerned ministries, branches and localities in, inspecting the implementation of the public debt strategy; every 5 years organize preliminary review, assessment, and experience in the implementation of the Strategy; assume the prime responsibility for, and coordinate with agencies in, proposing and submitting to the Prime Minister for decision the adjustment of strategic objectives and contents when necessary.
- In the process of implementing the National Financial Plan and borrowing and repaying public debt in the 2021-2025 period, in case of major fluctuations or risks, the Ministry of Finance shall promptly report to the Government for submission to the National Assembly for consideration and decision.
7.2. Ministry of Planning and Investment is responsible for:
- Formulate public investment programs to implement a number of important, key, dynamic and pervasive projects and works, and solve national, regional and regional development issues , report to the Government, the National Assembly for consideration and approval.
- Inspect, supervise and evaluate the effectiveness of public investment capital, including public debt for development investment; monitor and control borrowing and debt repayment activities of foreign-invested enterprises.
7.3. The State Bank of Vietnam is responsible for:
- Research, summarize and evaluate the implementation of foreign debt limits in the private sector, report to the Government for proposals on supplementing, amending or reporting to the National Assembly to amend regulations on supervision. , manage self-borrowing and self-repaying foreign debts of enterprises, enterprises, and credit institutions to suit the country's development conditions, nature of loan sources and borrowers.
- Research, submit to competent authorities for approval, deploy and apply a number of supplementary measures to manage foreign debt of enterprises and credit institutions in the form of self-borrowing and self-payment in order to more closely control activities, short, medium and long term foreign loans.
- Proposing the Government to improve the legal framework and organizational model on financial stability to implement macroprudential policies. Research and submit to competent authorities for permission to apply monitoring measures through safety indicators in parallel with adjusting the legal framework on self-borrowing and self-paying foreign debt management in the direction of applying these measures, monitoring capital flows to replace the self-borrowing and self-paying debt limit of enterprises and credit institutions.
7.4. Ministries, ministerial-level agencies, government-attached agencies, People's Committees of provinces and centrally run cities shall coordinate with the Ministry of Finance and relevant agencies, based on their state management functions and tasks according to state management functions and tasks, the provisions of law are responsible for directing and participating in the implementation of relevant contents of this Strategy; organize the effective use of public debt resources, arrange adequate and timely debt payment sources, take responsibility for accountability, and implement the periodical reporting regime as prescribed.

Source: Vitic/ thuvienphapluat.vn