The Nhat Tan Bridge is a cable-stayed bridge crossing the Red River in Ha Noi, inaugurated on January 4, 2015. It forms part of a new six-lane highway linking Ha Noi and Noi Bai International Airport. — VNA/VNS Photo Huy Hung

Credit solvency is more important than public debt ceiling, Deputy Prime Minister Vuong Dinh Hue said in parliament on Thursday.

The Government will accordingly limit its borrowings to its ability to repay, he said.

Other responses on the issue came from Minister of Finance Dinh Tien Dung and State Bank of Viet Nam (SBV) Governor Le Minh Hung who took the hot seat as the fourth meeting of the 14th National Assembly (NA) got underway in Ha Noi.

NA deputies fielded questions on mounting public debt, taxation, customs management, administrative reforms, non-performing loans (NPLs), interest rates and restructuring of credit institutions.

In the morning, NA deputies raised a host of questions about ways to ensure that public debt stayed within the safety zone and on improving the efficiency of public investments.

Dung said that a number of measures had been implemented to improve public debt management, such as enhancing the efficiency of using official development assistance (ODA), keeping the budget deficit within the annual target, tightening Government-guaranteed loans and improving the legal framework for public debt management.

Agreeing with NA deputy Nguyen Quang Tuan of Ha Noi on the importance of public investment efficiency, Dung said it was at the heart of ongoing efforts to restructure public investment.

Minister of Planning and Investment Nguyen Chi Dung said that the Law on Public Debt was being revised to allow more effective management.

He said projects using ODA would be sped up in 2017 and 2018 to take advantage of preferential terms. In the coming years, as a middle-income country, the loans will be less preferential in terms of interest rates and repayment schedules, he said..

Deputy Prime Minister Vuong Dinh Hue said that credit solvency was more important than public debt ceiling.

“The Government will not propose the lifting of the public debt ceiling. We will only borrow within our capacity to repay,” Hue said.

He also said rather than increasing tax rates, the Government would look to expanding the tax base, preventing tax fraud and improving collection of tax arrears to increase budget revenues.

Dung said that transfer pricing remained a pressing problem, not only in the production process but right from the investment stage onwards. The legal framework for tax management is being improved to better prevent transfer pricing by FDI firms including multinational corporations, he added. He stressed the importance of enhancing international co-operation in preventing transfer pricing.

The ministry has stepped up tax inspections at enterprises with related-party transactions. During the past two years, thousands of FDI firms were inspected for tax compliance, which helped add trillions of Vietnamese dong to the budget, the NA deputies were told.

Regarding the ministry’s proposal to raise several kinds of taxes, Dung said that impacts of such hikes would be studied carefully. “Any amendments will be in line with the spirit of creating favourable conditions for businesses and promoting economic growth.”

The finance ministry, in co-ordination with other relevant agencies, was also hastening administrative reforms, especially in inspections for import and export, and speeding up customs clearance, Dung said.

The NA deputies urged the ministry to ask the Government to issue a decree soon on electronic bills and work with the central bank to accelerate cashless payment as a foundation for better tax management.

NPL, interest rates

Taking the floor in the afternoon, Central Bank Governor Hung said the nation’s foreign currency reserves had reached a record high of US$46 billion, adding $7 billion from the beginning of this year.

Responding to concerns expressed by NA deputies over bad debt, Hung said the central bank was hastening the restructuring of credit institutions in line with resolving NPLs to build a healthy banking system.

The central bank was also striving to cut rates to reduce costs for businesses and the whole economy, as one of its top priorities, Hung said.

To reduce rates, it was important to keep inflation under control, ensure liquidity and speed up the resolution of NPLs, he added.

On inefficient banks, Hung said that the legal framework had to be improved to attract capable investors because of State budget limitations. The Law on Credit Institutions was also being amended to better handle this issue, he said.

He also said the central bank was reviewing lending policies towards improving credit access for hi-tech agricultural projects.

On questions about measures to mobilise huge reserves of gold and foreign currencies held by citizens, Hung said that the most feasible solution was to stabilise the macro-economy and consolidate confidence in the economy and in the value of Vietnamese dong. Ths would encourage people to turn their assets into investment, he said.

Answering questions about cryptocurrency, Hung said under current Vietnamese regulations, bitcoin was not a legal tender or an permitted means of payment.

However, from the perspective of treating it as investment asset, the central bank would co-operate with the Ministry of Justice to study the legal framework for managing bitcoin, he said.

“Cryptocurrency is gaining popularity in the world and countries are divided on how to manage it,” Hung said, adding that it was critical to develop an appropriate legal framework for the purpose.

Hung also stressed that the central bank would encourage cashless payment in the economy by reviewing banking card fees and making them reasonable, and by further developing the ATM network.

Hung will continue to field questions on Friday, followed by Minister of Information and Communications Truong Minh Tuan. Supreme Court Chief Justice Nguyen Hoa Binh will be present at the NA session on Saturday. — VNS