Disbursement of government bonds lower than estimated

The management of the state budget is tight and effective, contributing to the restructuring of the budget and public debt. Many solutions have been implemented in recent years to improve the financial efficiency of the state budget and public debt management, restructure the state budget, and manage public debt to ensure safe and sustainable national finance and contribute to macroeconomic stability. Financial affairs - state budget and public debt management have made significant contributions to socioeconomic development, as well as ensuring national defense and security, dealing with urgent issues such as natural disasters, epidemics, and environmental protection, and boosting international economic integration.

The State Treasury continues to issue Government bonds with varying maturities.

Although the Covid-19 pandemic had a serious impact on all socioeconomic aspects, including the state budget revenue source, the Government directed the implementation of synchronous and drastic solutions to closely control and manage the collection and expenditure of the state budget in 2021, prioritize and endeavor to prevent as well as control the Covid-19 pandemic, ensure social security, and stabilize people’s lives.

Furthermore, according to National Assembly Resolution No. 128/2020/QH14 on state budget estimates for 2021, the Government has organized capital mobilization well, ensuring sufficient sources to meet the demand for debt payment, offsetting deficit for development investment expenditure, and Government bond market development to become a crucial and effective capital mobilization channel of the state budget.

According to the Government's 2021 State Budget Settlement Report submitted to the National Assembly, the total loan estimate of the State budget is 608,569 billion VND; the settlement is 455,927 billion VND, down by 152,642 billion VND (equivalent to 25.1%) compared to the estimate.

Government bonds are issued diversely and flexibly, meeting the needs of capital mobilization.

In particular, concerning the central budget, the loan estimate is 579,772 billion VND, including 318,870 billion VND to offset the deficit and 260,902 billion VND to pay the principal; borrowing settlement is 449,516 billion VND, including 211,650 billion VND to offset the deficit and 237,866 billion VND to pay the principal, a decrease of 130,256 billion VND (equivalent to 22.4%) from the estimate.

The borrowing was 392,389 billion VND (of which foreign loans were 24,176 billion VND, Government bonds issuance was 318,213 billion VND, and borrowings from the public purse (50,000 billion VND), which was lower than the final settlement amount.

The Ministry of Finance (MoF) closely monitors the market situation, revenue, and expenditure of the state budget progress during the loan management process to ensure that the loan level is in line with the spending needs and to reduce the number of loans when the state budget revenue is quite good, but the public investment spending progress is still slow.

International organizations highly appreciate the budget management and debt management of the Government

Concerning domestic loans through the issuance of Government bonds, the plan for the issuance of Government bonds at the beginning of the year is 373,000 billion VND. The MoF has cut down by 49,000 billion VND (equivalent to 13% of the plan), to 324,000 billion VND based on the anticipated revenue, expenditure, and disbursement situation for public investment.

The actual implementation is 318,213 billion VND compared to the 324,000 billion VND planned. It can be seen that the domestically- issued Government bond has become an increasingly important and main source of loans of the central budget; thus basically meeting the needs of paying the loan principal of the central budget at home and abroad, ensuring prestige with investors; and spending the rest on development investment expenditures under the provisions of the Law on Public Debt Management.

Furthermore, the targets in the issuance of Government bonds meet the targets set by the National Assembly, such as diverse and flexible issuance maturities, meeting the demand for capital mobilization and development of the bond market, of which the issuance term is from 5 years or more (92% of the volume of Government bonds issued with maturities from 10 years to 30 years); the average issuance maturity time of Government bonds reaches 13.92 years, higher than the target from 9-11 years in Resolution No.23/2021/QH15 of National Assembly.

The Government debt portfolio continues to be effectively improved, with an average maturity time of 9.27 years, assisting the state budget in avoiding risks when allocating debt repayment sources in the short term. The average issuance rate of Government bonds in 2021 was 2.3% per year, lower than the average level of previous years.

Based on this result, Moody's praised the government's budget and debt management in 2022, raising Vietnam's national credit rating from Ba3 to Ba2, with a stable outlook. S&P Global Ratings also upgrades Vietnam's national credit rating from BB to BB+, with a stable outlook.

In addition, the MoF uses idle temporary public purse to lend to the central budget to lower the cost of borrowing for the central budget and boost the effectiveness of public purse management, while making sure that these loans stay within the overall

However, the public purse has been tied to each specific expenditure task as planned, such as public investment funding that has not been disbursed, and the salary reform policy that has not been implemented. Therefore, it has a "short-term" temporary idle essence and it should only be used for central budget loans with appropriate volume and time. In 2021, the MoF balanced the public purse to lend the central budget 50,000 billion VND to offset the deficit.

The public purse is entirely concentrated at State Bank. The State Bank specifically states that the temporarily idle public purse is prioritized for loans to the central budget. The remainder that the state budget has not yet needed to borrow is deposited with a term at highly secure commercial banks.

The approach adheres to the competitive bidding principle for interest rates, ensuring publicity, transparency, safety, and effectiveness following regulations and generally accepted international practices. Through the management of the public purse under the established regime, the MoF has produced more revenue and paid the State budget so far. A total of 19,100 billion VND, of which 2,000 billion VND was in 2021, has been paid out of the State Treasury's revenue from managing the state budget up to now./.