Using the social insurance fund to buy bonds is the safest investment, said Deputy Prime Minister Vu Van Ninh at an NA discussion about social fund lending activities on May 25.
Deputy Prime Minister said public debts still under control
As of late 2012, the social insurance fund had a surplus of VND200 trillion (USD9.6 million), with most of its loans going to the government and 24% to banks.
NA deputy, Bui Sy Loi, said the fund would face grave consequences if they lend money to banks or invest in the stock market.
"In 2010 and 2011, we gave loans to four banks and the debt of one Agribank member company has turned bad, creating possible losses of nearly VND1 trillion. Of course banks always give collateral for loans, but in reality it is difficult to recover from the banks," he said.
According to Loi, the government should revise the social insurance law to deal with stagnant debts. The number of insured people is about 15 million but only 10.5 million are actually contributing to the fund.
Answering the question whether it is a violation of the law for social insurance to loan funds to the government, Ninh said, "The law on social insurance states that to ensure the fund's safety, it is prohibited from making investment in 'risky industries'. In order to increase the fund, the money can be deposited into state-owned banks. The other method is to buy bonds or give loans at market interest rates."
NA deputy Vo Thi Dung, from HCM City, also raised question about an increase of 24.8% in the public debt between 2010 and 2011, most of which was from borrowing social insurance fund and issuing bonds.
Ninh said public, government and national debts are still under control. "The ratio of public debt to GDP is limited at 65% and we haven't reached this cap yet. The government will submit a detailed report about public debts to the NA soon." he said.
The report about public and foreign debts in 2011 showed that public debt is at 54.9% of GDP, and foreign debts equaled over VND1,000 trillion. The debts from issuing bonds accounted for 47.2% of total domestic debt.
