Cars and motorcyclists riding on a bridge built over Saigon River in Ho Chi Minh City / PHOTO: AFP
Media reports of late have kept up the refrain of Vietnamese people continuing to tighten their belts as economic conditions remain difficult.
The consumer price index fell by 0.44 percent in March, after decelerating in the first two months, according to the General Statistics Office.
In a comment on the CPI fall, Tran Thi Hang, deputy chief of the office, told the Tuoi Tre (Youth) newspaper that consumers were not excessively cutting down on their expenditures, but spending “more reasonably.”
It is a behavior worth appreciating, given that many companies are tempting consumers to spend more, especially banks that promise to refund customers up to 6 percent of transactions’ value when they pay with their credit cards.
When most people are able to resist the temptation to spend excessively, they avoid the risk of losing creditworthiness, and the chances of mass bankruptcy in the society decreases.
Once people know how to spend wisely, they have the right to ask the government to do the same, because their money makes up a large part of the exchequer.
However, the government, despite proclaiming time and again that it is cutting down on its spending, is yet to back its words with serious action, although it is obvious to everyone that Vietnam’s debt burden is getting heavier by the day.
The Ministry of Finance has reported that the government earned over VND195 trillion (US$9.16 billion) in the first quarter of this year, but spent nearly VND232.2 trillion ($10.91 billion).
Vietnam also raised the budget deficit cap this year from 4.8 percent to 5.3 percent of gross domestic product (GDP).
These look like reasonable moves as the government claimed they were needed for economic development, till we see reports about mega projects like a theater estimated to cost nearly VND1 trillion ($47 million) in Ho Chi Minh City, or a plan to spend millions (if not billions) to host the Asian Games in 2019.
According to the global debt clock, Vietnam’s public debt was more than $80.2 billion as of last month end, or $887.74 per each citizen in the 90.5-million strong country. This was up 11.2 percent over last year, and accounted for 48 percent of the GDP.
The debt map colors Vietnam light orange, which is the third highest rank out of eight in terms of how much is owed.
Apparently, Vietnam’s public debt situation is getting worse, as the country recently needed the backing of the World Bank’s Multilateral Investment Guarantee Agency to take a $500 million loan for a project to upgrade a national way.
Work on the National Way No.20, which connects Ho Chi Minh City with the Central Highlands resort town of Da Lat, began in December 2011 and was expected to be completed this year. However, a lack for funds has delayed the project.
If the government does not pay heed to the fact that Vietnam is in big debt trouble and having difficulty borrowing money, the habit of overspending and needless spending will continue, and the worst scenario – national bankruptcy – will loom visibly on the horizon.
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