Vietnam aims to narrow fiscal deficit to 3.5% of GDP by 2020. Photo: Internet
The Vietnamese National Assembly, the country’s supreme legislative body has approved a national economic restructuring plan for 2016-2020 under which many critical financial indicators will be brought down to ensure a sustainable growth path after years of
The legislators on November 8 voted to lower the country’s budget deficit to 3.5% of GDP
by 2020, against above 5% over the past few years.
The ceilings for public debt and foreign debt are maintained at 65% and 50% of GDP, respectively, while the cap for government debt is revised upwardly to 54% of GDP, four percentage points higher than the previous five-year plan.
Notably, the bad debt
ratio in the banking system is aimed to fall to below 3%, versus a 17% rate identified in 2012 and around 2.6% currently. Lending rates are set to go down to the average level of the ASEAN-4 group.
The stock market will play an important role in the national economy, to ease pressure on the money market. The share market capitalization is projected to be equal to 70% of GDP by 2020 while the portion of the bond market is aimed at 30% of GDP.
The parliament asks the government to finish revamping the three pillars of the economy, which are public investment, state-owned enterprises (SOEs) and banking system by 2019, to switch to other sectors.
The government is also required to consider letting loss-making SOEs to go bankrupt to stick to market conditions.
The National Assembly earlier approved the GDP growth target for 2017 at 6.7%, compared to 6.3-6.5% estimated for this year. Exports are set to grow 6-7%, lower than a 10% expansion in recent years given souring global demand.