According to Minister of Finance Dinh Tien Dung, the maturity of G-bonds increased sharply from an average of 3.9 years in 2011 to 12.7 years in 2017, which helped increase the average debt tenor of G-bonds to 6.7 years in 2017 from the previous 1.8 years.
The maturity of G-bonds increased to 12.7 years in 2017
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Notably, G-bond buyers have also become more diverse. Holdings by banks decreased to 53.06% in 2017 from a staggering 78% in 2016, while the ratio of securities and insurance companies rose to 45.9% from the 2016 figure of 19.7%.
Such major adjustments in debt structure, debt terms, and creditors significantly eased the debt repayment pressure on the overstretched State budget.
As such, budget overspending and public debts were closely managed in the past two years. Especially, G-bond issues were in line with actual disbursement process.
The rate of public debt hikes has slowed down to the current 9.6% from the annually average of 18.1% for 2011-2015.
Public debts as a percentage of gross domestic product (GDP) saw a decline of 2.2 percentage points, from 63.6% in late 2016 to 61.4% in late 2017. Therefore, government debts fell from 52.6% of GDP to 51.8% of GDP respectively, the minister said.
According to Dung, the government has been enacting synchronous measures to implement effectively the Politburo’s Resolution No.7 on restructuring the State budget and public debt management and the National Assembly’s Resolution No.25 on the national five-year financial plan. As a result, the State budget collection in 2016-2017 far exceeded estimates by 9.3 percent and 6.3 percent respectively.
Budget revenues at central level accounted for 55-56 percent of the total revenues while localities contributed 44-45 percent.
However, Dung said, the proportion of the central budget revenue in the total State budget collection dropped from 61.3 percent in 2011-2015 to 56-57 percent in 2016-2017 due to the reduction of revenues from crude oil and trade activities.
The reduction of some taxes at a higher rate than the previous roadmap has enabled businesses to improve their competitiveness but to some extent affected the State budget collection in general and central budget revenues in particular, Dung said.
The State budget spending in 2016-2017 was strictly controlled with regular expenditures reaching about 62-63 percent. The proportion is projected to be 61.7 percent in 2018.
The finance ministry will strengthen budgetary disciplines and promote thrift practices and wastefulness prevention, Minister Dung stressed.
Relating to the execution of financial disciplines, Dung said the National Assembly has promulgated some laws stipulating responsibilities of each budget management units.
Pertaining to the illegal spending in some projects, the exceeding disbursement of foreign loans, high ratio of capital construction overdue debts, and wastefulness, Dung said the main reason lies in the asynchronous system of legal documents, which hinders the process of implementation. Regulations on spending have not caught up with the real situation.
Stronger measures should be taken to tighten financial disciplines while inspection work should be intensified and wrongdoings in financial, budget and State property management strictly punished to curb the above-mentioned problems, Dung said.
