Billions of treasuries ‘stagnant’ at the bank

24-Apr-2019 Intellasia | Tien Phong | 6:38 AM Print This Post

The disbursement progress of public investment has not been as expected, so the mobilised money is not out of the treasury. The bank’s treasury has stalled for over a year, which shows viciousness in bond issuance. If this situation continues, it is costly to the budget when paying interest on mobilising the money that is not disbursed.

SSI Securities Market’s update of quarter 1/2019 provides noticeable information: By the end of March 31, 2019, the amount of State Treasury remains “stagnant” in the commercial banks when the amount of treasury bonds issued in Q1/ 2019 was 69.469 trillion dong. Along with that, updating data on the amount of public investment disbursed showed that about 49.8 trillion dong was disbursed.

Making calculations, only the amount of State Treasury in the first quarter “called” the bid after drawdown, there is still “redemption” of 19.669 trillion dong. Meanwhile, another data of SSI also showed that by the end of 2018, the amount of State Treasury sent to Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Vietnam Joint Stock Commercial Bank of Industry and Trade (Vietinbank) was over 216.7 trillion dong. If adding the “redemption” above, the amount of capital that the State Treasury sent to these three commercial banks has reached 235.669 trillion dong. But that is not enough. According to the investigation of Tien Phong journalist, the actual amount of State Treasury deposited at commercial banks is much higher. “At the end of the first quarter of 2019, the deposit amount must be approximately 400 trillion dong”a reliable source said.

Treasury bonds are one of the types of government bonds and are short-term debt instruments issued by the State Treasury. This type of bond is issued to mobilise idle money in the market, compensate the temporary deficit of the state budget. government investors use treasury bonds to regulate their payment facilities of the banking system, the main purpose is money control.

The State Treasury report showed that, on January 31, 2019, investment capital under the 2018 disbursement plan was estimated at 342.177 trillion dong, equaling 85 percent of the plan. The disbursement progress of public investment was slow, not as expected, so the State Treasury must continue to bring unspent money to banks. But in fact, from the date of calling for issuance, this amount of interest has been calculated, and this interest will continue to be accrued then calculated into the national debt.

The reason force majeure of slow disbursement of is public investment.

At the regular government meeting in March 2019, prime minister Nguyen Xuan Phuc had to raise his voice to remind slow disbursement, especially in a number of ministries and sectors, and demanded ministries take drastic measures to speed up the progress of disbursement of this capital. Shortly thereafter, at the regular press conference (April 5), the Ministry of Finance also provided information showing that the progress of implementation and disbursement of the first quarter still only reached about 11 percent of the estimate. There are four ministries, branches and 21 localities that have disbursed more than 20%, 27 ministries, branches and one locality have not disbursed the capital plan (disbursement rate is below one percent), such as Ministry of Industry and Trade, Ministry of Construction, Hanoi National University, HCM City National University and Vietnam Cooperative Alliance.

In 2018, the State Treasury initially proposed a plan to mobilise 200 trillion dong of government bonds (VGBs), and then reduced to 175 trillion dong, actual mobilisation result was 165.797 trillion dong. It is expected that in 2019, the volume of government bonds will be mobilised through bidding channels of about 260 trillion. The average period of issuance is about 13 years. The State Treasury will maintain a weekly issuance schedule, bid for different types of short, medium and long term.

An expert in the financial sector said that with the “stagnant” money in commercial banks as mentioned above, it was time for both the Ministry of Finance and the State Bank of Vietnam (SBV) to “sit back” to consider handling.

Economic expert Nguyen Minh Phong said that the slow disbursement of public investment took place for many years. What need to be done are the efforts of the ministries, branches and localities right from the early days of the year to avoid the situation of “having money and not spending”.

Also, Doctor of Economics Phan Minh Ngoc once remarked: “The fact that the State Treasury mobilises capital and sends it to the bank to enjoy interest is similar to a snake eating its own tail”.

 


Category: Finance, Vietnam

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