Vietnam finance ministry allays concerns about local governments' debts

Thanh Nien News

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 An undated photo of vehicles moving on a newly-built bridge in Ca Mau Town, the capital of the southernmost province. Photo: VNA
A representative of the finance ministry has allayed concerns that many local governments are struggling financially, after local media reported two agencies in the southern region are drowning in debt.
Speaking to news website VnExpress on Monday, Vo Thanh Hung, chief of the ministry's budget department, admitted that the financial situations of the government and Party agencies in the southern provinces of Ca Mau and Bac Lieu are "unusual."
However, he said, the ministry will tighten fiscal discipline at local governments to prevent similar problems at other places.
Hung also confirmed with the new website that there will be no rescue packages for the debt-laden agencies, which are reportedly behind the payment deadline for a total sum of more than VND303 billion ($13.25 million), including salaries for their employees.
He quoted existing regulations as saying that the agencies will have to deal with their own fiscal problems and can seek help from provincial authorities, not the central government, if they fail to pay their debt.
Only when the provincial authorities fail at the mission will the central government step in, according to Hung.
After local media exposed the problems at Ca Mau and Bac Lieu last week, many economists and legislators have raised concerns that that the lack of fiscal discipline at local governments will soon become a threat to the sustainability of Vietnam's public debt.
Vietnam's public debt is expected to reach 61.3 percent of gross domestic product this year. It is forecast to hit the limit set at 65 percent of GDP in 2017.
The People's Committee of Ca Mau Town, the capital of Ca Mau Province, owes a total of VND300 billion to contractors of public construction projects and suppliers of public services such as environment, lighting, and landscaping, local media reported.
The town's budget deficit has kept increasing since 2012 and was estimated at more than VND90 billion in 2013.
The town has reportedly sought advanced funding of VND50 billion from the province to pay its employees and finance other activities.
Meanwhile, the Party committee in the capital town of Bac Lieu Province has struggled since at least July, after depleting its annual budget of VND7.5 billion.
The committee also owes over VND3.2 billion to different local agencies, including hospitals where its employees received heath check-ups, according to local media.
Authorities in both Ca Mau and Bac Lieu provinces later dismissed the reports as incorrect, saying that the debts were lower than reported.

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