Government releases draft Socio-economic Development Plan at ongoing NA session.
The draft of the Socioeconomic Development Plan for 2016-2020 was revealed at the tenth session of National Assembly (NA) XIII, with economic indicators and public debt targets.
Growth targets higher
The overall objective is to maintain macro-economic stability while striving for higher economic growth than previous years.
The government targets average GDP growth over the next five years of 6.5-7 per cent per year, totaling from VND33,840 trillion ($1.51 trillion) to VND34,250 trillion ($1.53 trillion). By 2020 GDP per capita will stand at $3,670-$3,750.
The contribution made by industry, construction and services is targeted to represent 70 per cent of GDP. Inflation will be managed at around 5-7 per cent per year, and average total investment over the five years is to be around 31 per cent of GDP, or VND10,506 trillion ($470.35 billion).
Public deficit in 2020 will have been managed at less than 4.8 per cent of GDP, with the budget deficit to be gradually reduced to 4.8 per cent. Public debt will not be higher than 65 per cent of GDP by 2020, government debt no higher than 55 per cent of GDP, and national debt borrowed from other countries no higher than 50 per cent of GDP.
Total-factor productivity (TFP) is to contribute 30-35 per cent of economic growth. Labor productivity will grow 4-5 per cent per year on average.
Mobilized budget funds will be set at 20-21 per cent of GDP, of which 19-20 per cent is to come from taxes and fees. The budget balance in 2016-2020 is estimated at VND7,000 trillion ($313.39 billion), as budget revenue in the period is to increase 1.7-fold against the last five years.
The government has put budget spending at VND8,660 trillion ($387.70 billion) in the next five years, accounting for over 25 per cent of GDP, and in 2020 will be 1.7-fold higher than in 2015, with average spending over the next five years to be 1.6-fold higher than in the last five years.
Appropriate public debt level
Total demand for borrowing by the government in the 2016-2020 period will be from VND3,020 trillion to VND3,090 trillion ($135.20 billion to $138.33 billion). Borrowing to cover the budget deficit will be VND1,360 trillion ($60.88 billion) and borrowing for lending at about VND280 trillion ($12.53 billion), with the remainder for repaying existing debt as terms expire.
Total ODA borrowing and borrowing from preferential sources of donors to balance the budget over the next five years will be VND250 trillion ($11.19 billion).
Total foreign borrowing by enterprises to 2020 is estimated to reach $52-$53 billion, of which medium and long-term debt will be about $35-$36 billion and short-term borrowing about $17 billion.
In the next five years the government will complete the legal framework on managing public debt in line with the Law on Public Debt 2015, the Law on Public Investment 2014, and other related laws.
The government will also re-calculate the public debt ceiling for each year over the next five years, based on analysis of the debt situation and to secure the ability of repay in certain economic conditions.
The structure of debt will re re-organized, increasing long-term debt, increasing foreign borrowing to ease repayment pressure in the short term and reduce the risk from global economic fluctuations.
The government also commits to strictly supervising the use of loans and adopting regulations to increase consistency among fiscal policy, public investment, and public debt management.