Capital resources raised through this channel have significantly contributed to increasing public investments, maintaining stable economic growth and strengthening Vietnam’s position in the international market, according to the Vietnam Economic News.
In late November, the Vietnam State Treasury for the second time adjusted the annual plan for government bond issuance in 2014, increasing the total amount of bonds by 30 trillion VND, from 232 trillion VND to 262 trillion VND.
In August, the treasury, for the first time, decided to increase the total amount of bonds by 22 trillion VND. These adjustments have led to a decrease in the amount of short-term bonds and a considerable increase in the amount of long-term bonds, especially 10-15-year bonds.
Specifically, the adjusted amount of less-than-one-year bonds is 26 trillion VND (under the initial plan, this was 40 trillion VND); the amount of two-year bonds decreased from 55 trillion VND to 34 trillion VND; and three-year bonds from 65 trillion VND to 61 trillion VND. Meanwhile, the amount of five-year bonds increased from 67 trillion VND to 80 trillion VND; 10-year bonds from 10 trillion VND to 41 trillion VND; and 15-year bonds from 5 trillion VND to 20 trillion VND.
In the opinion of economists, these adjustments go in line with the new strategy for raising capital through government bonds, which focuses on the issuance of long-term bonds to help the state balance revenue and expenditure and take the initiative in final settlements. According to the Ministry of Finance, in November, the Vietnam Trade Treasury successfully organised bidding sessions for over 7.38 trillion VND worth of government bonds.
From the beginning of 2014 until November 24, the total amount of capital raised through the issuance of government bonds reached 228.8 trillion VND, equal to 76.9 percent of the plan for making up state budget overspending on development investment in 2014. The year 2014 has also seen successful results Vietnam achieved in issuing international bonds.
In November, the Ministry of Finance successfully issued 10-year government bonds totally worth 1 billion USD in the international capital market, with an annual interest rate of 4.8 percent, lower than the initially planned rate of over 5.12 percent.
The Ministry of Finance said this successful issuance of international bonds had helped the Vietnamese economy save about 32.5 million USD of government bond interest payment for 10 years. At the same time, it has allowed the swap of 54.4 percent of the original value of international bonds issued in 2005 and 25.4 percent of the original value of international bonds issued in 2010, bringing Vietnam total benefit of 13.9 million USD.
The Ministry of Finance affirmed that long-term government bonds continued to attract the attention of domestic and foreign investors. This will help Vietnam raise capital to make up state budget overspending on development investment and restructure public debts in the direction of extending loans and reducing the debt payment pressure in accordance with the government’s guidance.
To ensure state budget balance in 2015 as well as the effective use of capital resources raised through government bonds, the Ministry of Planning and Investment recently asked relevant authorities to review the plans on using capital resources raised via government bonds.
Capital resources raised from the issuance of government bonds will also be used to pay debts related to infrastructure projects, focusing on projects which have been completed and put into use, and projects which face a little capital shortage to be completed in 2015 or 2016.
The Ministry of Planning and Investment affirmed that in 2015, government bonds will be used to finance official development assistance (ODA) projects/programmes which will receive reciprocal capital from the state budget of Vietnam.
The Ministry of Transport will give priority to important, urgent projects such as Nhat Tan Bridge and the road connecting the Noi Bai International Airport to Nhat Tan Bridge, the Cat Linh-Ha Dong Urban Railway Project, the Da Nang-Quang Ngai Expressway Development Project, and the Ben Luc-Long Thanh Expressway Project.
original source: http://m.english.vietnamnet.vn/fms/business/118658/vietnam-succeeds-in-selling-government-bonds.html#