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Vietnam: Public Debt Law to Be Debated

(Mar. 13, 2009) A draft law on public debt was discussed on March 9, 2009, in committees of Vietnam's National Assembly, as well as by the Assembly's Council on Ethnic Nationalities. The debate centers on whether or not the debts of state-owned enterprises should be included in the law's provisions on pubic debt management. As drafted, the law addresses government loans, loans guaranteed by the government, and loans to local government authorities. It has been proposed by some deputies in the Assembly that debts incurred by state-owned enterprises should also be covered by the legislation as a type of public debt.

Trinh Huy Quach, Deputy Chair of the Assembly's Committee for Finance and Budget, disagreed with the proposal, arguing that the enterprises in question had the right to borrow and repay debts and had to be responsible for their own finances. He felt that the statement in the draft including government responsibility for loans that had been guaranteed by the government was sufficient.

Another aspect of the draft that is controversial at present is the question of which agency should manage public debt. The draft continues the current situation, in which the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam are each able to function as public debt managers. Some have suggested that there should be a single agency with that responsibility, proposing that it be the Ministry of Finance. Others, including the head of the Assembly's Law Committee, have criticized the drafted text as unclear and stated that the proposal to allow local governments to raise funds through loans was improper. (Law on Public Debt Tops Talks at NA, VIỆT NAM NEWS, Mar. 10, 2009, available at