Vietnam’s public debt remains at a safe level, Japanese Ambassador to Vietnam Mitsuo Sakaba told the Vietnam News Agency on May 31.
The ambassador pointed out that the public debt versus GDP ratio of Vietnam is much lower than that of Japan, where the debt equals almost 80% of its gross domestic product (GDP).
Vietnamese officials said the country’s public borrowings totaled some 44.7% of its GDP last year, lower than the safe level of 50% set by the government and advised by the World Bank.
The safe level of public debt depends on each country’s economic development and GDP growth, said the Japanese diplomat, noting that Vietnam’s debt will no longer be a worry if the country maintains its GDP growth of 7%-8%.
Sakaba proposed Vietnam conduct tax, monetary and financial reform to increase the Government’s revenues.
He also emphasized the necessity for renovating the management of state-owned enterprises so that these enterprises can pay more taxes and bring greater economic benefits.
Sakaba also advocated a controversial plan of the Vietnamese government to develop a US$56 billion express railway funded by Japan’s ODA and built by Japanese contractors, saying the luxurious route will help develop urban areas and increase economic benefits along the poor country.
The diplomat’s statements came ahead of the conference of international donors scheduled to take place June 9 in the city of Rach Gia in Southern Vietnam.
Vietnamese lawmakers have voiced serious concerns over the country’s national debt, complaining of inefficient public investment due to corruption and wastefulness and warning of a Greece-like loan crisis.
Experts pointed out that the public sector’s Incremental Capital Output Ratio (ICOR) hit 12 last year, which was one of the highest levels in the world and indicated low efficiency.
In particular, some economists have urged the government to reduce the use of ODA because most of the funding falls into the hands of project contractors from the lending countries, mainly Japan.
But Vietnamese Prime Minister Nguyen Tan Dung spoke highly of ODA in the recent conference of donors last Dec, when the creditors committed record high ODA totaling more than US$8 billion for Vietnam this year.
Vietnamese Deputy Prime Minister Nguyen Sinh Hung has recently said the government would consider raising the public debt limit to more than 50%.
However, the CIA’s World Factbook indicated that Vietnam’s national debt soared to more than 52% of GDP in 2009 from 38% in the previous year. (
www.vietnamplus.vn)
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