The government has sent a proposal to the National Assembly Standing Committee on using funds from the state budget to settle the bad debt of state-owned enterprises (SOEs) despite earlier statements to the contrary.
Government proposes using state budget to settle state-owned enterprises' bad debts
The Ministry of Planning and Investment submitted the proposal to the National Assembly Standing Committee on behalf of the government in a report on the national economic restructure.
According to a report released by the National Financial Supervisory Commission late in 2013, by the end of 2012, the bad bad debt held by SOEs, excluding Vietnam Shipbuilding Industry Group (Vinashin), now known as the Shipbuilding Industry Corporation (SBIC), accounted for 11.8% of Vietnam's total bad debt.
Vietnam still has a high rate of public debt and high state budget deficit, making the possibility of using state funds to settle SOE bad debt more difficult.
Meanwhile, at earlier National Assembly sessions, the government said that state funds would not be used for dealing with the bad debts held by SOEs. So, the government approved the launch of Vietnam Asset Management Company (VAMC) as a solution to the problem.
Recently, at a NA Q&A session, Nguyen Van Binh, governor of State Bank of Vietnam (SBV) also affirmed that VAMC will not use the state budget for the bad debt settlement.
The SBV has recommended that the government raise the registered capital of VAMC to VND2 trillion (USD95.23 million) from the current VND500 billion (USD23.8 million).
Binh added that the VAMC has bought VND800 billion (USD38.1 million) of bad debts compared to its registered capital of just VND500 billion, showing the financial capacity of the of the firm to be weak.
The governor noted that basically the government agreed on raising the registered capital of VMAC to VND2 trillion next year.
