On the morning of September 8, Minister Ho Duc Phoc had a meeting with the European Investment Bank (EIB) Working Group led by Mr. Kris Peeters, Vice President of EIB. There were also Mr. Julien Guerrier, the European Union's ambassador at Vietnam, representatives from the EIB Group's Southeast Asia and Pacific area, units with experience in the Asia and Pacific Public Sector, and representative leaders of many departments.
Mr. Kris Peeters and the delegation were welcomed by Minister Ho Duc Phoc as they arrived at the Ministry of Finance
During the meeting, Minister Ho Duc Phoc discussed Vietnam's macroeconomic position and public debt, noting that the country's debt safety indicators are now under strict supervision; Vietnam still has a significant debt surplus; the issue is selecting a loan and an efficient project. By the end of 2022, Vietnam's public debt will be around 38% of GDP, while government debt is approximately 34.7% of GDP, foreign debt is approximately 36.8% of GDP, and the government's direct debt repayment obligation is approximately 16% of total state budget income.
Vietnam is now working hard to complete the energy transition in order to reach its objective aim, and it wants to encourage this process as soon as possible. Vietnamese Government assigned the Ministry of Finance to be the lead agency to connect capital sources. Agreements are made on the government's behalf in order to raise money towards green energy conversion targets. The Ministry of Finance was tasked with overseeing the development of a carbon credit trading platform with the goal of converting to green energy at the same time.
According to the Just Energy Transition Partnership's (JETP) list of high-priority investment projects from now through 2025, three project groups are included: offshore wind power, battery storage, and functional hydropower.
The EIB Vice President, Mr. Kris Peeters, shared his thoughts on current macroeconomic developments and the handling of Vietnam's public debt
The objective of fostering green transformation and attaining equal emissions targets of 0 by 2050, necessitates not only the cooperation of the state but firms in the private sector. The most effective way to raise funds is through state-owned commercial banks, EIB for example.
The Vietnamese government encourages more international organizations and development partners to increase funding to Vietnam, helping Vietnam adapt to a feasible and fair energy exchange, and assist Vietnam in achieving the targets of COP26.
Regarding ODA loans and preferential loans, the Minister reaffirmed Vietnam's policy of solely borrowing from abroad to fund development investments rather than borrowing for daily expenses. Governmental policy is now limiting the use of guarantees in order to improve business conditions using a self-borrowing, self-paying, self-evaluation of efficacy, risk assessment, and appropriateness assessment method that complies with international standards.
"We appreciate the EIB's goodwill and genuine loan support for Vietnam as it works to implement the JETP is one of the important financial resources that helps Vietnam combat climate change", the Minister stressed.
The Minister also expressed the expectation that the two parties would concretize the cabinet to sign and carry out workable agreements in order to accomplish goals following this meeting.
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Meeting overview
Mr. Kris Peeters shared his thoughts on the macroeconomic environment, highlighting in particular Vietnam's proactive public debt management because it was seen to be the only country in the region with debt work reduced during the Covid-19 outbreak. The EIB delegate claimed that Vietnam effectively manages public debt and implements public policy, something that many other nations find difficult to do. Representatives of the EIB also endorsed enhancing the collaboration between the EIB and Vietnam's state-owned commercial banks. Representatives from the two parties spoke about the adjustment to the loan agreement for the Metro 3 Hanoi project, the extra loan for the Metro 2 Ho Chi Minh City project, and more during the meeting.
HP (Translator: TN)
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