It is necessary to develop an independent and professional public debt management agency

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Deputy Minister of Finance Nguyen Duc Chi made a speech at the workshop.
Deputy Minister of Finance Nguyen Duc Chi made a speech at the workshop.

Attending the workshop were representatives of Party agencies, National Assembly agencies, agencies of the Government, ministries, sectors, localities, representatives of research agencies, investors and representatives of international partners.

Speaking at the opening ceremony, Deputy Minister of Finance Nguyen Duc Chi said that the socio-economic development strategy for the 2021-2030 period has been approved by the 13th Party Congress.

Accordingly, by 2030, Vietnam is a high-middle-income developing country with modern, competitive and efficient management institutions.

Resolution 07-NQ/TW dated November 18, 2016 of the Politburo on policies and solutions to restructure the state budget and manage public debt to ensure a safe, sustainable national finance has improved the institutions, especially policies, tools and public debt management apparatus to ensure compliance with the provisions of the Constitution and relevant laws in order to comprehensively control risks and public debt effectively.

Furthermore, after 2020, researching, innovating and improving the effectiveness and efficiency of public debt management agencies with an appropriate model. Resolution 23/2021/QH15 dated July 28, 2021 of the National Assembly sets the goal of maintaining the security and safety of the national financial system.

Implementing the above orientations, the Government and Prime Minister issued Decision No. 460/QD-TTg dated April 14, 2022 approving the Strategy for Public Debt to 2030. In particular, it stated the views, objectives, orientations and solutions for public debt management, meeting the demand on borrowing with appropriate costs and risks, ensuring debt repayment plans, and controlling targets for public debt, government debt, and foreign debt.

For specific implementation, the Ministry of Finance has proposed technical assistance from the International Monetary Fund and the World Bank on the institutional organization of public debt management. Within the framework of the working session, the delegation had a week to have direct discussions with agencies of the Party, the National Assembly, the Government, and units assigned to perform tasks related to debt management in the Ministry of Finance, and capital market participants.

Following the face-to-face meetings, the group coordinated with the Ministry of Finance to hold a workshop to share international experiences on institutional models of public debt management, helping agencies have more information to have an overall and complete view of the functions, tasks and coordination in debt management in the world and in the context of Vietnam.

According to Deputy Minister Nguyen Duc Chi, the international experience shows that the organization of a debt management agency model is also very diverse, with many different approaches and methods of debt management.

Many countries have chosen to set up a debt management office (DMO) to centralize debt management functions to achieve a high level of professionalism. The OECD countries chose to establish an independent debt management office (Austria, Finland, Ireland, Portugal, Sweden, Germany, Hungary and the UK), a few others set up their own DMO but operated under the Ministry of Finance (such as Australia, Belgium, Canada, France, the Netherlands, New Zealand, Poland and the United States).

Other countries in Southeast Asia have also set up separate DMOs such as Thailand, Philippines and Indonesia. The common goal in the establishment of a DMO is to ensure consistent, synchronous implementation, comprehensive control of risks arising from borrowing, implementation of debt management policies, and the Government’s loan repayment plan.

“For Vietnam, currently, public debt management policy is associated with fiscal and monetary policy. However, the new public debt management policy is mainly focused on mobilizing preferential loans, and operations following international practices and have not been fully implemented such as monitoring and evaluation of all loans and debt transactions to ensure compliance with the risk parameters set out in the debt strategy; risk monitoring of the entire government debt portfolio, the connection between treasury management policies and public debt management, a common shared database on public debt,” Deputy Minister Nguyen Duc Chi said.

Mrs. Stefanie Stallmeister, Operations Manager for Vietnam, East Asia and Pacific of The World Bank
Mrs. Stefanie Stallmeister, Operations Manager for Vietnam, East Asia and Pacific of The World Bank

Vietnam has set a goal by 2030 to become a middle-income country with a national credit rating of investment grade. In the context of Vietnam’s economic position and role having many positive changes, the ability to access preferential loans will decrease, the debt portfolio will generate more risks, requiring synchronized, unified and professionalized management to enhance the effectiveness of policy making and achieve a cost-risk structure of public debt in line with the set management objectives.

Therefore, according to the Deputy Minister, it is necessary to research and develop the DMO model with functions in line with international practices in accordance with the development level and the demand of Vietnam’s management in each period. In parallel with institutional reform, the Ministry will continue to improve debt management tools, risk control mechanisms to ensure fiscal space and policies to achieve the above goals.

Speaking at the workshop, Mrs. Stefanie Stallmeister, Operations Manager for Vietnam, East Asia and Pacific of The World Bank believed that debt management in Vietnam is still scattered, so we still have a lot of space to continue to strengthen the institutional arrangement of debt management in Vietnam.

“Countries like Indonesia and Thailand have established their own independent debt management office. We see the establishment of independent debt management offices that will help leverage the strength of that agency, along with focused expertise, and thorough analysis,” Stefanie Stallmeister said.

Also, according to Mrs. Stefanie Stallmeister, in order to develop the Government’s debt market, support debt management, and implement effective monetary and fiscal policy goals, the Ministry of Finance also plans to set up a debt management office by 2030.

This time frame also reflected that institutional reforms were very challenging, requiring amendments on the legal corridor and legal framework which takes time.

“Strengthening risk management in debt management as well as risk management and debt management institutions will help Vietnam reduce its vulnerability to external economic shocks. We are ready to support the Government of Vietnam and the Ministry of Finance in technical terms to achieve the set goals,” the World Bank representative said.

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