A 21-page report on the macroeconomic situation of HCM City released by the University of Economics and Law and the Institute for Development and Research in Banking Technology cites challenges hindering the development of HCM City.

The report points out that the public debt of the city is nearly hitting the ceiling, and that lower economic growth rates in the last two years have increased public debt.

HCM City’s public debt once accounted for 70 percent of total budget collections. However, the level was allowed to be 90 percent under Resolution 54. 

The problem now is the resolution will expire by the end of the year, and there has not been a draft resolution to replace Resolution 54. 

Therefore, HCM City may not enjoy the special mechanism anymore, and the public debt ceiling is likely to be lowered to 70 percent. 

The main point of view shown in the national public debt strategy by 2030 shows that localities need to be sure their public debts don’t exceed 60 percent of GDP. If not, HCM City would run out of credit room and the city would need to borrow more capital to run key investment programs.

The research team, led by Dr Pham Thi Thanh Xuan, pointed out that the special resources granted by ‘Mechanism 54’ cannot be turned into reality when it expires (it is valid from January 2018 to the end of 2022).

One of the key points of Resolution 54, which is a ‘special financial mechanism’ for HCM City, cannot bring the desired effects. The special receipts from seaport infrastructure, for example, have only been implemented since April 1 after two delays because of Covid-19. 

The fee collection aims to create financial resources to upgrade seaport infrastructure, both land and waterways. However, the fee collection began when the economy had not fully recovered after the pandemic, so it has put more burden on enterprises and affected their recovery.

Meanwhile, the mechanism on special receipts from public asset management has not been implemented because of its complexity, which requires cooperation among ministries and branches. The policy on collecting fees from parking on pavements has also failed.

The other ‘bottleneck’ that affects HCM City is the slow deployment of the national economic stimulus package. A report said that only 6 percent of the VND347 trillion package has been disbursed.

Tran Chung