On October 6th 2017, Deputy Minister Do Hoang Anh Tuan had a working session with Mr. Felipe Carlos Jaramillo – Senior Director of the World Bank Group’s Macroeconomics and Fiscal Management Global Practice accompanied by working group. Attending the meeting were representatives from MOF’s relevant Departments.

At the meeting, Deputy Minister Do Hoang Anh Tuan warmly welcomed Mr. Felipe Carlos Jaramillo having the first trip to Vietnam and shared some achievements on macroeconomic governance, fiscal policy, public debt, poverty reduction in multi-dimensional poverty standards. Specifically, in the first nine months of this year, GDP growth was at 6.3% and it is estimated to reach 6.7% for the whole year 2017.

Despite the positive results to be expected, Vietnam faces many challenges. The expected growth rate of 6.7% is quite high, but not sustainable, mainly results from huge investment. The biggest challenge in the short term is the bad debt and the way to deal with it, and the solutions to successfully implementing the National Assembly Resolution No. 42 on piloting bad debt settlement. At the same time, it is necessary to drastically implement the Government’s Action Plan on State-owned Enterprise Reform, in which the primary goal of SOEs capital divestment is to promote equitization and enterprise reform. For the financial sector, the current challenge is to manage state budget revenues and expenditures effectively and manage public debt safely and sustainably. The public expenditure report jointly released by the Ministry of Finance and the World Bank has recommended specific solutions, helping to reform the revenue structure, expand the collection base and improve the tax administration. Regarding the expenditures, the proposed solutions include changing the state budget structure, increasing spending on development investment, reducing recurrent expenditure, reforming the administrative apparatus, wage structure. Specific solutions are being discussed at the national level and will be implemented in the coming time.

Regarding the public debt, Deputy Minister said that this is the biggest challenge of the economy. The public debt ceiling is set by the National Assembly at 65%, after 2020 it must gradually reduce to 60-62% of GDP. The State Budget Law in 2015 was a step in the reform in the management of public debt, local government debt, control of contingent liabilities and capital expenditure debt. The Ministry of Finance believes that the revised Law on Public Debt Management which is considered and approved by the National Assembly in the next session meeting will create a legal framework for the implementation of safe and sustainable public debt management solutions.

Talking about the role of the World Bank, the Ministry of Finance highly appreciated the support and consultation of the World Bank for macro management, including support to Vietnam Government in the fiscal management, tax policy and accounting system reform.

Speaking at the meeting, Senior Director of the World Bank Group’s Macroeconomics and Fiscal Management Global Practice expressed his impressions on Vietnam's achievements and he also shared the challenges Vietnam Government has to face up with, which is also the case other transition countries have encountered. Congratulations on the successful graduation of IDA, Mr. Felipe Carlos Jaramillo said that with a high level of public debt, a country cannot rely solely on public debt for infrastructure development. In the coming time, Vietnam needs to study and switch to use market instruments to mobilize capital for development. Debt management is therefore significantly important, and WB agrees with Vietnam's perspective considering that debt management is one of the priorities.

According to WB, Vietnam needs to develop policies and guidance on fiscal management to ensure discipline on public debt and curb budget deficit. In fiscal management, buffer zones should also be provided to cope with financial shocks. WB also said that it is obvious for most IDA-graduated countries that the partnership with WB will be changed from donor-relationship to consultation-partnership and providing technical support. With mutual understanding between the two parties over the years, the World Bank will continue to be a reliable partner in sharing knowledge and experience on a global scale as proposed by Government of Vietnam.