Despite the large surplus, government bonds must still be issued.

In the first quarter of 2024, the State Treasury plans to issue VND127 trillion in government bonds, up 10% year-on-year. “Although the state budget has a temporary idle amount, it still has to issue government bonds,” said Ms. Tran Thi Hue, Deputy General Director of the State Treasury.

Ms. Tran Thi Hue, Deputy General Director of State Treasury.

In 2023, the total state budget deposited in the commercial banking system will reach VND959,891 billion, but VND298,476 billion of government bonds will still be issued. Madam, why do we still have to borrow money when the budget is in surplus?

First of all, I affirm that there is no concept of surplus or unspent state funds, but all revenues, expenditures, loans, and debt repayments are included in the plan approved by the National Assembly and the Prime Minister. All expenditures from the state budget have specific addresses and specific spending times. During the time that has not been spent, the state budget is temporarily idle, not surplus or unspent, or there is money but no idea where to spend it, as many economic experts often say.

What is the concept of “temporary idle” here, madam?

It can be understood that temporarily idle state budget funds are the positive difference between revenue forecast and expenditure forecast in the period and the difference between the state budget balance at the beginning of the period and the state budget balance at the end of the period.

This temporarily idle amount is given priority to advance the central budget and provincial budgets that are temporarily in deficit; deposited for a maximum term of no more than 3 months at commercial banks with a high safety level according to the State Bank's ranking. Expenditures that have been planned and have specific addresses, but have not been spent, are temporarily idle. On the contrary, the principal and interest payments of government bonds due, and development investment expenditures still have to borrow to pay and invest because the state budget revenue is not enough to pay these amounts as well as development investment expenditures.

But the amount of 959,891 billion VND deposited by the State Treasury at commercial banks is too large, "shocking" many economic experts as well as National Assembly delegates?

The state treasury does not always have such a large idle balance and this balance is not fixed, but always fluctuates, sometimes increasing, sometimes decreasing, sometimes more, sometimes less, and sometimes the state treasury is even temporarily in deficit for many different objective reasons. In case of shortage, it is compensated by issuing treasury bills; early withdrawal of term deposits at commercial banks according to the provisions of Decree 24/2016/ND-CP regulating the state treasury management regime.

Fortunately, for many years now, the state budget has not been in a state of deficit, so since 2019, the State Treasury has regularly deposited temporarily idle state budget funds at commercial banks.

What is the result of using this money?

The State Treasury must fully and promptly meet all expenditure needs of the State budget and units transacting with the State Treasury at all times; fully and timely pay all domestic and foreign debts. The temporarily idle budget must be used for the right purpose, and the principal and interest must be fully and timely recovered upon maturity.

Since 2019 (the time the temporary idle fund deposit service at commercial banks began), the State Treasury has collected over VND 23,000 billion in interest for the state budget; of which, in 2023 alone, it will collect VND 6,815 billion in interest for the state budget, 5.7 times higher than in 2022 (over VND 1,200 billion). Therefore, although the state treasury currently still has a temporarily idle amount, still deposited at commercial banks with a high level of safety provided by the State Bank, the State Treasury is still assigned to issue government bonds.

Madam, in 2024, what is the expected volume of Government bonds issued by the State Treasury?

In the context of many fluctuations in the world economy, the disbursement rate of public investment capital is still slow (estimated disbursement of public investment capital in the first 2 months of 2024 reached about VND 59,998 billion, equivalent to 8.7% of the plan, equal to 9.13% of the task assigned by the Prime Minister), the state treasury inventory is at a high level, the State Treasury continues to proactively advise the Ministry of Finance on solutions to deploy capital mobilization, meet the capital needs of the state budget at reasonable costs, maintain the Government bond market to operate regularly and sustainably; contribute to safe public debt management and support the State Bank in operating monetary policy, controlling inflation, and stabilizing the macro economy.

Depending on the actual revenue and expenditure of the state budget, disbursement of public investment capital and the financial and monetary market, the State Treasury will submit to the Ministry of Finance a quarterly plan to issue government bonds on the basis of strengthening the connection between state treasury management and state budget management and public debt management, saving borrowing costs for the state budget.

Can you elaborate on the situation of TPCP issuance in the first quarter of this year?

In the first quarter of this year, the State Treasury plans to mobilize VND127,000 billion through the issuance of government bonds, an increase of about 10% over the same period in 2023. Of which, it is expected to issue VND25,000 billion with a term of 5 years; VND3,000 billion with a term of 7 years; VND30,000 billion with a term of 10 years; VND50,000 billion with a term of 15 years; VND9,000 billion with a term of 20 years and VND10,000 billion with a term of 30 years. Thus, all domestic loans have long terms, of which the term of 10 years or more accounts for 18% of the total expected issuance volume (VND99,000 billion), ensuring the safety and efficiency of the state budget. In January 2024, we issued VND16,500 billion worth of government bonds with an average maturity of 13.35 years and an average interest rate of 2.19% per year. Both the maturity and interest rate are better than the average in 2023 (average issuance maturity of 12.58 years; average interest rate of 3.21% per year).

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