IMPACT OF STATE BUDGET DEFICIT ON GOVERNMENT DEBT IN VIETNAM

MINISTRY OF EDUCATION AND TRAINING FOREIGN TRADE UNIVERSITY o0o DISSERTATION IMPACT OF STATE BUDGET DEFICIT ON GOVERNMENT DEBT IN VIETNAM Major: International Trade and Policy in Vietnam Full Name: Nguyen Thi Hong Quyen SUPERVISOR: Assoc.prof Dr Hoang Xuan Binh Ha Noi - 2016 ACKNOWLEDGEMENT This postgraduate research project could not be accomplished without the strong supports from my supervisor from Foreign Trade University, colleagues at the Department of Debt Management and External Finance, who I have been working with over the last years What I have found during my time working here was the primary inspiration of selecting this very typical topic, along with great encouragements from family and friends Throughout the process of completing this project, I have encountered many difficulties from data collection, analysis and interpretation I would like to take this opportunity to acknowledge such appreciations to my colleagues, who have offered their devotions to assist myself from establishing this research work First and foremost, I would like to express my greatest gratitude to my supervisor, Associate Professor, Doctor Hoang Xuan Binh, who has been overseen the progress of my entire research project over the last months Sincerely, if this project was not under his guidance, patience, motivation and academic suggestions on some of my weaknesses, I would not have managed efficiently to finish this study I greatly cherish the opportunity that my colleagues gave to me, to learn on perfecting my work professionally It was one of my greatest experiences with supervisors and colleagues throughout five years working in the Debt Management and External Finance, Ministry of Finance Without any doubt, I would like to thank my family, classmates and colleagues Throughout a long stressful time doing the year-round project, I could not express any greater gratefulness to them, standing by my side and support intellectually TABLE OF CONTENTS ACKNOWLEDGEMENT LIST OF FIGURES, GRAPHS AND TABLES .5 LIST OF ABBREVIATIONS CHAPTER I INTRODUCTION .8 1.1 Urgency of subject 1.2 Researching overall on budget deficit and government debt 1.3 The objectives of research 11 1.4 Scale and subjects of the research 11 1.3 Method of research 12 1.4 Scientific and practical meaning of the research 13 1.5 Structure of the research 13 CHAPTER II: LITERATURE REVIEW 14 2.1 Theories relevant to the research 14 2.1.1 State budget 14 2.1.2 Public debt and government debt .17 2.1.3 Some theoretical research framework 19 2.2.1 Debt burden indicators .33 2.2.2 Debt sustainability 35 2.2.3 Baseline Scenario 38 2.2.4 Standardized stress tests 41 2.2.5 Shocks Analysis in DSF and in DSA 60 CHAPTER III: METHODOLOGY AND DATA SOURCES 63 3.1 Research procedure 63 3.2 Data description 66 3.3 Research assumption 68 3.3.1 Building a model for Vietnam case 68 3.3.2 Domestic Financing Instruments: 70 3.3.3 External Financing Instruments: .71 CHAPTER IV FINDINGS AND DISCUSSION 77 4.1 Alternate scenarios of Primary Deficit 77 4.1.1 Average Primary Balance 77 4.1.2 Revenue-expenditure structure 79 4.1.3 Annual budget deficit reduction schedule 83 4.2 Financing Strategy 87 4.2.1 Financing Sources: Domestic versus External 87 4.2.2 Tenor of new Borrowing 89 4.3 Exchange rate 95 4.4 Interest of domestic and external borrowings 97 4.4.1 Interest of new domestic borrowings 98 4.4.2 Interest of new external borrowings 99 4.5 Notes on Nominal GDP 101 4.6 Summary of findings 101 CHAPTER CONCLUSION AND POLICY RECOMENDATION .104 5.1 Conclusion review and Policy recommendation 104 5.1.1 Effective fiscal deficit control 104 5.1.2 In short-term Vietnam properly forcuses more on controlling effectively expenditures, in middle and long terms, gradually changing expenditure structures under state budget to consolidate fiscal policy .105 5.1.3 Developing domestic capital market should be first and foremost priority 105 5.1.4 A benchmark yield curve of government bond can serve as a strategic management of financing cost .107 5.2 Suggesstions for further research 108 LIST OF REFERENCES .110 LIST OF FIGURES, GRAPHS AND TABLES Figure 1: Negative shock to real GDP growth (PDSA) - impact on the level of gross financing needs Figure 10: Negative shock to non-debt creating flows - impact on the level of gross financing needs Figure 11: Negative combination shock - impact on the level of gross financing needs Figure 2: Exchange rate depreciation (PDSA) - impact on the level of gross financing needs Figure 3: Shocks to the Primary Balance (PDSA) - impact on the level of gross financing needs Figure 4: Negative shock to primary balance and read GDP growth - impact on the level of gross financing needs Figure 5: Contingent liability shock - impact on the level of gross financing needs Figure 6: Key variables set to historical averages - impact on the level of gross financing needs Figure 7: Shocks to financing terms - impact on the level of gross financing needs Figure 8: Two-year shock to export growth - impact on the level of gross financing needs Figure 9: Negative shock to the GDP deflator in US dollar terms - impact on the level of gross financing needs Graph 1: Interest Payment to revenue and Primary Revenue to GDP Graph 2: Evolution of Annual Gross financing needs in different scenarios Graph 3: Evolution of Interest Service in different scenarios Graph 4: Evolution of Debt to GDP in different scenarios Graph 5: Evolution of External Debt to Total Debt in different scenarios Graph 6: Evolution of Annual Rollover Amount in different scenarios of new borrowings tenor Graph 7: Evolution of Annual Gross financing needs in different scenarios of Vietnam dong depreciation Graph 8: Evolution of Annual Gross financing needs in different scenarios of new borrowing cost Table 1: General Government Net Debt of some countries, 2007- 2021 Table 2: Risk classification and CPIA Score Table 3: Stress Tests in PDSA and EDSA Table 4: Summary of Macro-Fiscal Stress Tests Table 5: Definition of External Instruments Table 6: Summary of baseline scenario assumptions Table 7: Debt indicators in Baseline Scenario Table 8: Baseline scenario – break down of GFN Table 9: Debt Indicators in scenarios of Average Primary Balance Table 10: Evolutions of Debt indicators to stabilize debt to GDP ratio Table 11: Debt Indicators in scenarios of Revenue – Expenditure structure Table 12: Scenario –Annual Primary Deficit remains at 3.4% GDP Table 13: Scenario – Increasing Annual Primary Deficit / GDP Table 14: Debt indicators in scenarios of average new domestic tenor Table 14: Debt indicators in scenarios of domestic financing ratio Table 16: Debt indicators in scenarios of average new external tenor Table 17: Debt indicators in scenarios of annual VND depreciation Table 18: Debt indicators in scenarios of new domestic borrowing cost Table 19: Debt indicators in scenarios of new external borrowing cost LIST OF ABBREVIATIONS ATM DSA DSF EDSA EMs EUR FDI FTA GBP GDP GFN IDA IMF LIC DSA MAC DSA MOF PDSA PV TPP USD VND WAL WB NPV LCU NICA X CA M NT NI INT IR CPIA PD PPG Average time to maturity Debt sustainability analysis Debt sustainability framework External Debt sustainability analysis Emerging markets official currency of the eurozone Foreign direct investment Free-trade agreement official currency of the United Kingdom Gross domestic product Gross financing needs (also gross financing requirements) International Development Association International Monetary Fund Low income country Debt sustainability analysis Market-accessed country free-trade agreement Ministry of Finance of Vietnam Public Debt sustainability analysis Present Value Trans-Pacific Partnership official currency of the United States official currency of Vietnam Weighted Average Life World Bank Net present value Local currency unit non-interest current account exports of goods and services Current account Import of goods and services Net transfer Net income Interest Payment Interest rate Country Policy and Institutional Assessment Primary Deficit Public and publicly guaranteed CHAPTER I INTRODUCTION 1.1 Urgency of subject Due to the latest report from the Ministry of Finance to the Standing Committee of National Assembly, public debts of Vietnam stood at 62.2% of GDP in 2015 If GDP of Vietnam grows at 6.5% in 2016, with the inflation bellow 5% (y.o.y), it is expected public debts of Vietnam will be at 64.9% of GDP, just 0.1% of the bellow the symbolic 65% of GDP that was approved by the National Assembly (Ministry of Finance 2016) Not long before that, after intense debates, National Assembly on 29th July, 2016 approved another record of high budget deficit of 6.33% GDP, much higher than the 5% of GDP targeted for 2014 A major contributing factor to that record high was higher than estimated ODA disbursement in 2014, which was a 26.1 trillion VND add on to the initial estimates According to Associate Professor, Doctor Hoang Xuan Binh, Public Debt Crisis: From Theory to Practice, public debt of Vietnam stood at only 33.8% in 2007, this number rose significantly through the year and he expected that in 2015, public debts would be between 60- 65% of GDP In fact, as mentioned earlier in 2015, public debt of Vietnam was 62.2% of GDP According the same author, even though public debts of Vietnam has been supported by strong concessional level of ODA financing with a long maturity, the pace of increasing public debt (year on year basis), the inefficient use of public financing through high ICOR, and vulnerability to external shocks that may expose public debts of Vietnam into over all economic stability, such as inflation raising, private investment and the over all credit rating of the sovereign Never than before, have the issues of public debts and budget deficit become so critical like these days Not only does it become the centre of debates amongst policy makers and scholars, but this topic also receives a lot of attention from different view in line of economic development This study is urged on finding new evidence to provide a better understanding, fill in the absence of research gap in the literature review by examining the impact of state budget deficit on government debt in Vietnam 1.2 Researching overall on budget deficit and government debt For a long period of time, there were a lot of discussions on the government should keep running deficits Many respected economists considered deficit in general is very bad for the economy: ● One argues that it will crowd out private investment; ● It redistributes resource and responsibilities to different groups of society, thereby creating disparity in the economy as a whole (which is against the principle of invisible hand or market self correction principles.) ● Last but not least, it generates burden for the future generations which in the long run indifferent to the effect of raising tax, while the accumulation of public debts arisen from Government’s policies of persistent deficits may lead to the collapse of the economy While debates amongst policy makers on how much one government should borrow, and amongst many economists on the good and the bad of government borrowing and its implication to state budget, governments all over the world keep borrowing Table 1: General Government Net Debt of some countries, 2007- 2021 (in percent of GDP) United States Japan France United Kingdom Vietnam Europe Brazil Peru 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 44.5 50.5 62.0 69.4 75.9 79.4 80.8 80.3 79.8 82.2 82.3 82.1 82.6 83.4 80.5 57.7 95.3 60.3 106.2 70.1 113.1 73.7 127.2 76.4 129.0 81.6 124.2 84.4 126.2 87.4 125.3 88.2 127.9 89.2 130.7 89.8 132.6 90.0 132.4 89.4 132.2 88.0 37.1 44.4 57.4 68.5 72.9 76.2 77.6 79.5 80.4 80.5 80.3 80.0 78.1 75.8 37.9 22.2 44.1 16.7 34 22.0 37.1 13.0 42 27.8 40.4 12.2 44.9 28.6 38.0 10.3 39.3 26.4 34.5 7.2 39.4 24.1 32.3 4.6 42.6 24.5 30.6 3.5 46.4 23.2 33.1 3.6 50.3 21.8 36.2 5.6 53.1 25.2 45.8 7.7 53.3 25.5 50.4 9.1 53.3 25.6 53.6 9.9 53.2 25.1 56.5 10.3 52.7 24.7 59.6 10.5 Source: IMF 2016 At the same time, however, neo classical theory believes that deficit is part of any Nation’s development policies In fact, it is quite hard to find any Nation or Government during the course of current development not running in deficit or causing certain level of public debts When one government revenues is lower than its expected expenditures, it has created budget deficit In order to finance that deficit, the government will have to borrow either externally or domestically to cover that deficit Unlike government deficit that can be changed from this year to next year, thanks to government’s efforts in raising revenues or reducing its expenditures, the level of government debts may not be changed so easy due to its accumulating feature On the literature point of view, even the schools of debt free economy see the need of identifying the relationship between public debts and budget deficits: “Persistent budget deficits have increased economist’s interest in theories and evidence about fiscal policies” (Robert J Barro 1989) The main argument of debt free scholar was that while public debts created burden of obligations to the future generation, the involvement of the Government during the course of capital mobilization made the economy worse off due to its administrative ineffectiveness in fulfilling the mobilization goals The tendency of over borrowing in any government may boots demand for consumptions, instead of encouraging reserves and provisions That may lead to deepen current account deficit, while credit market is going into further imperfection due to superior role against other market players of the government in the capital market Some even goes further by declaring: “…either the nation must destroy public credits, or public credit will destroy the nation” (O’brien 1975) While many people and economists believe that government borrowing is not a good option for economic development, it is indeed just a present value of future expenditures, and it is quite hard to convince the current investment is better than future investment on the same purposes There are numbers of empirical evidences 10 well as gross financing needs with regard to an appropriate exposure to exchange risk as mentioned above Nevertheless, this flexible strategy should be applied carefully with a medium to long term view in situation when indebtness level and ratio of external debt are at low level to avoid intoleratble impacts of exchange rate shocks 4.5 Notes on Nominal GDP In recent years, economic growth has not reached target as expected in plan, which causes targets of deficit/GDP and government debt/GDP indicator have not reached as well It is because annual fiscal plan and annual borrowing plan have been built basing nominal GDP which is calculated based on projections of economic growth and inflation However, managing progress will base on absolute value which is approved in plan There is a significant gap and somewhat inconsistances between planning and its implementing When economic growth (real) or inflation are lower than planned, actual nominal GDP is lower However, annual state budget and borrowing/debt payment plans which have been approved are not adjusted correlatively to ensure reaching targets (to GDP) Therefore, regarding to absolute value, target on budget deficit and oustanding debt has been reached, but budget and outstanding debt to GDP has not been reached 4.6 Summary of findings From discussion on impact of the above factors, it is concluded that there is not only one-way impact of state budget deficit on government debt but also the relation between state budget deficit and government debt, which is expressed as follows: Firstly, although high budget deficit leads to rapid increasing of debt indicators, different levels of indebtness has differences in impact on fiscal balance According to that, with the same basic budget deficit countries with higher indebtness level would have bigger fiscal defict due to higher annual interest payment Vietnam also faces this challenge for fiscal policy and debt management policy as mentioned at article 4.1, baseline scenario; average interest payment is 3.09% GDP in period of 2016-2020 101 Secondly, there is trade-off between deficit and risk of government debt portfolio From the viewpoint of debt management office, this is the problem to optimize the cost and risk of debt portfolio As analysed at 4.2 and 4.3, for such a developing country as Vietnam, cost (interest payment, maturity, grace period) of external financing is normally lower than domestic financing However, external borrowing is attached with risk of exchange rate When domestic currency is depreciated, interest and principla payments of external borrowing would increase deficit Besides, expenditure of external borrowings is also changeable when sovereign ratings or GDP growth change This is also a challenge for Vietnam when Vietnam will graduate IDA of the World Bank in June 2017 Thirdly, as discussed at 4.4, borrowing expenditure of the both external and domestic markets impacts directly on deficit and indebtness indicators, which leads to trends in orienting debt management policy: 1) Encourage development of domestic capital market (focusing on enlarging investors, diversifying debt instruments of government); improve sovereign ratings to decrease domestic and external borrowings, especially in the situation when Vietnam is about to graduate IDA and tapping international capital market 2) fiscal policy needs to be adjusted flexibly with situation of domestic and external capital market For the period of time 2011-2013, economic is affected by global finance crisis with high domestic and external interests However, Vietnam still remained high deficit to develop socioeconomic, which is one of the reasons of increasing indebtness indicators and pressure on debt payment as currently Forthly, deficit and indebtness indicators are affected by economic growth From the viewpoint of public policy, important factors that impact both deficit and indebtness indicators are effection of country’s resources, including state budget and borrowing resources High effection of using resources will increase budget revenue, which create resources for debt payment aslo promote economic growth and improve macro balance, which is also the target for Assembly and Government of Vietnam There have been Resolutions on restructure economic focusing on public investment and enhance total factor productivity (TFP) in period of 2016-2020 Nevertheless, 102 these policies needs long time to be conducted before deficit and indebtness indicators are improved 103 CHAPTER CONCLUSION AND POLICY RECOMENDATION As discussed, interest service of Vietnam has been increasing dramatically This trend is expected to continue during research period of 2016-2020, which expressed in indicarors of debt /gross state budget revenue and debt/GDP increasing continously Accompanied with the fact that most if not all debt indicators are at risk of either approaching or exceeding the safety limit set by the National Assembly, Vietnam’s fiscal stance remains limited Moreover, Vietnam’s fiscal and macroeconomic management frameworks have not kept pace with the more open and increasingly decentralized economic environment—one that has made the country more vulnerable to external shocks The increasing budget deficits in the context of high debt have emphasized the importance of developing a sustainable fiscal path 5.1 Conclusion review and Policy recommendation Analysises and discussions of this research are to recommend fiscal policies and debt management policies of Vietnam in coming time as following: 5.1.1 Effective fiscal deficit control To effectively control fiscal deficit, the Governement of Vietnam must manage well its components: primary deficit - including primary revenue and primary expenditure; and interest expenditure Breaking down fiscal deficit into its components for better management is essensial becasue of two reasons On one hand, these component play different roles in building annual fiscal plan While the annual interest service can be easily and precisely estimated, primary deficit i.e primary revenue and expenditure are more difficult to project as they depend on many other macro-economic variables, such as growth and inflation Also, other government policies - which can viewed and made independently from fiscal policy - can have significantly impact on actual fiscal performance In another words, projecting primary balance can be extremely challenging since fiscal factors are exposed to various type of risks and shocks - some some of which are unlikely to managed, even expected For example, the incidence of Samsung decided to kill off its Galazy Note cellphone model has certainly impact Vietnam's export since the company's export 104 represents about 20% of the whole country's annual shipments Besides the loss in export-import revenue and corporate income tax revenue from Samsung, this incidence also impact other entreprises in supporting industries of Vietnam thus further impact revenue On the other hand, primary balance and interest expenses management requires different type of management policy: primary balance management are more related to fiscal policies while interest expense management are more related to debt management policies 5.1.2 In short-term Vietnam properly forcuses more on controlling effectively expenditures, in middle and long terms, gradually changing expenditure structures under state budget to consolidate fiscal policy Growth slowdown also strains the fiscal stance In recent years, there are changes in the world: global growth expectation decreases; impact of environment issues and climate change are unforcastable; protectionism trends to increase; public debt crisis in Europe… Not only Vietnam but all countries are efforting to seek for new sollution for stable growth Failing to reach targets on growth will directly impact on state budget revenue, especially for country as Vietnam whose domestic revenue contributes a big part in to total revenue To consolidate fiscal in long term, traditional solutions mean to increase revenue are not enough On the other hand, changing taxation policies, taxation schedules have been implementing frequently in recent years Contiuning changing taxation policies may impact negatively on stablity of business environment for both domestic and foreign enterprises Thus, in short-term Vietnam properly forcuses more on controlling effectively expenditures, in middle and long terms, gradually changing expenditure structures under state budget to consolidate fiscal policy 5.1.3 Developing domestic capital market should be first and foremost priority Currentlty, the investor base is homogenous and heavily dependent on developments in the banking sector Although the banking sector consists of a high number of banks that range from foreign, domestic private and domestic governmentowned they tend to interpret economic development in a similar manner Hence, most 105 holders of government securities will interpret market conditions over a similar investment horizon and react in the same manner and the market will trend in the same direction At the current juncture, introducing a more heterogeneous investor base is important to ensure that the primary auctions will be well covered and that the secondary market remains viable Although growth prospects for long-term institutional investor base in Vietnam are favorable with the introduction of private pension schemes and investment funds these reforms will only make a meaningful contribution to the composition of the investor over the medium-term A larger non-resident investor base would deepen the government securities market by diversifying the investor base though it may heighten exchange rate and interest rate volatility In a number of Emerging Markets (EMs), investment flows from non-resident investors have allowed government to increase the share of their local currency financing, extend the maturity profile and improve secondary market liquidity Introducing non-resident investors on a large scale into an illiquid bond and foreign exchange market could lead to significant volatility were such flows to reverse quickly, as recent events showed The State Bank of Vietnam and the Ministry of Finance should consequently carefully monitor non-resident investor holdings, flows and behavior using both qualitative and quantitative measures to understand investment patterns while appreciating that policy buffers may need to be increased in line with non-resident investment holdings Currently, market structure and policy framework are not fully prepared for non-resident institutional investors Custody and settlement issues remain insufficient, secondary market liquidity is limited and transparency of debt and macroeconomic data needs to be improved An ongoing effort with the Vietnam Bond Market Association could help overcome some of transparency issues as it can consolidate market related information and ongoing reforms on custody and 106 settlement by the Ministry of Finance could provide a lasting solution once fully implemented 5.1.4 A benchmark yield curve of government bond can serve as a strategic management of financing cost Typically, public debt developed markets structure their issues around a predefined set of benchmarks ranging from short to long-term standard maturities The latter can be represented graphically as a plot that combines the yield and term to maturity, which is called the “benchmark yield curve” This is a very useful analytic instrument for markets and policymakers The benchmark yield curve underpins the pricing of all the relevant areas in the securities markets: primary market issues from the public and the private sector; secondary market trading of equivalent issues; derivatives markets (repo, interest-rate futures, options and swaps markets); and the valuation of institutional investors’ portfolios In 2013, the Government of Vietnam approved a Roadmap for Bond Market Development This Roadmap has outlined the targets for both government and corporate bond market development, setting priorities to address the markets challenges The Roadmap called for coordinated actions by stakeholders, both government agencies and private stakeholders These include units within the Ministry of Finance (i.e Bank and Financial Institution Department, Debt Management Department), the State Bank of Vietnam (the central bank), the State Treasury (which plays the role of government bond issuer, thus being responsible for conducting the issuance processes), the Hanoi Stock Exchange (which provide a secondary market platform for bonds, and where government bond trades must be reported), the Vietnam Securities Depository (where settlement for bond trades take place), and Vietnam Bond Market Association (which not only plays a significant role in improving standards of market practices, but is also tasked with the establishment of bond market information center) The reform agenda is ambitious and will require careful stakeholder planning a strong champion to drive the process from the side of Ministry of Finance side Planned reforms include modernizing bond trading infrastructure that will provide a connection between Hanoi Stock Exchange 107 and the Bloomberg trading system Reforms will also address the bond custody and settlement that will be transferred from commercial banks to the State Bank of Vietnam to reduce settlement risk and achieve a full delivery-versus-payment and will also look at the prospect to develop a central counterparty One of the most important purpose of the caption plan is to create a benchmark yield curve in a strategic way that it could signal the market and the Government on the potential cost of new borrowing However, a limitation to any potential benchmark building strategy is the requirement that principal debt service must be repaid from budgetary resources The practice limits refinancing risk but would also place a limit on the size of individual maturities and any prospective benchmark issuance program The explicit link of debt service to budgetary resources is also visible in how the public deficit is presented as it includes principal and interest debt service payments and effectively treats principal payments as expenditure that is not in line with sound practice Debt managers need to assess carefully the pace at which a benchmark yield curve can be built, as well as which benchmark maturities can be launched The development of a benchmark building strategy needs to be accompanied by a comprehensive design of the primary and secondary market that includes its institutional organization, regulations and settlement infrastructure Topics that need to be considered in Vietnam are the size of the debt; the rollover risk and the feasibility of lengthening maturities: A strategy that is too focused on issuing only market benchmarks might have the effect of increasing the rollover risk excessively by concentrating maturing debt in too few dates that not necessarily match with the Government cash flow calendar This should be assessed together with techniques to manage rollover risk such as buybacks and securities exchanges 5.2 Suggesstions for further research For further research, I would suggest in detail investigation of current redemption profile of government debt in order to closely calculate gross financing 108 needsas well as other indicators Besides, it is also highly recommended to expand debt instruments and risk management instruments including buyback, switch program Regarding the projection of fundamental macro economic variables, I would like to suggest application of well developed model reflecting the inter-relationship among growth, inflation, external and internal shocks to cost of borrowings Such model should also have capacity to intergrate impacts among different government policies This would benefit government in building and implementing policies for optimal and sustainable socio-economic growth 109 LIST OF REFERENCES Abu Bakar, N.A and S Hassam 2008 Empirical evaluation on external debt of Malaysia International Business and Economics Research Journal, vol 7, pp 95-108 Acocella, Nicola 1998 The Foundations of Economic Policy: Values and Techniques [English Translation of ‘Fondamenti di Politica Economica] Cambridge: Cambridge University Press Alesina, A., Ardagna, S., Perotti, R., and Schiantarelli, F 2002 Fiscal Policy, Profits and Investment American Economic Review, vol 92, pp 571-589 Ando, A, and F Modigliani 1963 The 'Life Cycle' Hypothesis of Saving: Aggregate Implications and Tests American Economic Review 53 (March):55-84 Auerbach, Alan J, and Jagadeesh Gokhale 1993 General Accounts and Lifetime Tax Rates, 1900-1991 Economic Review (Federal Reserve Bank of Cleveland) 29 (1):2-13 Auerbach, Alan J, Jagadeesh Gokhale, and Laurence J Kotlikoff 1991 Generational Accounts: A Meaningful Alternative to Deficit Accounting In Tax Policy and the Economy, edited by D Bradford Cambridge, Massachusetts: NBER and MIT Press Ayadi, F S and Ayadi, F O 2008 The Impact of External Debt on Economic Growth: A Comparative study of Nigeria and South Africa Journal of Sustainable Development in Africa, Vol 10, No.3, pp 234-264 Bakar, N and S Hassan 2008 Empirical evaluation on external debt of Malaysia International Business Economic, vol 7, pp.1564-1575 Barro, R J 1989 The Ricardian approach to budget deficits The Journal of Economic Perspectives, vol 3, pp 37-54 10 Barro, Robert J 1974 Are Government Bonds Net Wealth? Journal of Political Economy 82 (6):1095-1117 11 Barro, Robert J 2003 Have no fear: Bush tax plan won’t jack up interest rates Business Week, May 110 12 Becker, Gary S 1968 Crime as Punishment: An Economic Approach.Journal of Political Economy 76 (2): 169-217 13 Bennett, James T, and Thomas J DiLorenzo 1984 Political Entrepreneurship and Reform of the Rent-Seeking Society In Neoclassical political economy: the analysis of rent-seeking and DUP activities / edited by David C Colander, edited by D C Colander Cambridge, Mass: Ballinger Publishing Company 14 Boopen, S., Kesseven, P and Ramesh, D 2007 External Debt and Economic Growth: A Vector Error Correction Approach International Journal of Business Research, pp 211-233 15 Brennan, Geoffrey, and James M Buchanan 1987 The Logic of the Ricardian Equivalence Theorem In Deficits, edited by J M Buchanan, C K Rowley and R D Tollison Oxford, UK: Basil Blackwell Ltd 16 Buchanan, J M 1958 Public Principles of Public Debt Homewood, Illinois: Irwin 17 Buchanan, James M, Richard E Wagner, and John Burton 1978 The Consequences of Mr Keynes London: The Institute of Economic Affairs 18 Buchanan, James M 1967 Public Finance in Democratic Process Chapel Hill: The University of North Carolina Press 19 Buchanan, James, and Gordon Tullock 1962 The Calculus of Consent Ann Arbor: University of Michigan Press 20 Buiter, Willem H 1990 Principles of Budgetary and Financial Policy New York, London: Harvester Wheatsheaf 21 Buiter, Willem H 2001 Notes on 'A Code for Fiscal Stability' Oxford Economic Papers 53:1-19 22 Burnside, Craig ed 2005 “Fiscal Sustainability in Theory and Practice – A Handbook” The World Bank, Washington D.C 23 Cebura, R.J 1995 The impact of federal government budget deficits on economic growth in the United States: An empirical investigation, 1955-1992 International Review of Economic and Finance, vol 4, pp 245-252 111 24 Chadha et al 1992 and Roberts 1995 Assuming constant growth of potential GDP 25 Cholifihani, M 2008 A Co-integration Analysis of Public Debt Service and GDP in Indonesia Journal of Management and Social Sciences, Vol 4, No 26 Choong, C K., E Lau, K S V Liew and C H Puah 2010 Does debt foster economic growth? The experience of Malaysia African Journal of Business Management, vol 8, pp 1564-1575 27 Clements, B., R Bhattacharya and T Q Nguyen 2003 External debt, public investment, and growth in low-income countries IMF Working paper 03/249 28 Deshpande, A 1997 The debt overchang and the disincentive to invest Journal of Development Economics, vol 52, pp 169-187 29 Diamond, Peter A 1965 National Debt in a Neoclassical Growth Model American Economic Review 55 (December):1126-50 30 Dogruel, F and A.S Dogruel 2007 Foreign debt dynamics in middle income countries 31 Downs, A 1957 An Economic Theory of Democracy New York: Harper and Row 32 Elmendorf, Douglas W, and N Gregory Mankiw 1998 Government Debt Working Paper 6470 NBER Working Paper Series, Cambridge, MA: NBER 33 Fischer, Stanley, and William Easterly 1990 The Economics of the Government Budget Constraint The World Bank Research Observer (2):127-42 34 Freeman, S M and D J Webber 2009 Basic needs, government debt and economic growth The Growth Economy, vol 32, pp 965-994 35 Friedman, Benjamin M 1989 Day of Reckoning New York: Vintage Books 36 Friedman, M 1957 A Theory of the Consumption Function Princeton, NJ: Princeton University Press 37 Friedman, M 1962 Capitalism & Freedom Chicago: The University of Chicago Press 112 38 Giannaros, D., Kolluri, B., and M, Panik 1999 An Empirical Analysis of the Effects of Government Spending on Capital Investment: Evidence from O.E.C.D Countries International Economic Journal, vol 12, pp 45-55 39 Hammeed, A., Ashraf, H., and Chaudhary, M A 2008 External debt and its impact on economic and business growth in Pakistan International Research Journal of Finance and Economics, vol 20, pp 132-140 40 Hồng, Xn Bình 2015 Khủng hoảng nợ cơng Từ lý thuyết đến thực tiễn Hà Nội: NXB Khoa học Kỹ thuật 41 Im, K.S., M.H Pesaran and Y Shin 2003 Testing on unit roots in heterogeneous panels Journal of Economy, vol 115, pp 53-74 42 IMF and IDA 2004 Debt Sustainability in Low-Income Countries- Proposal for an Operational Framework and Policy Implications 43 IMF 2016 Fiscal Monitor, 2016, “Debt-Use it wisely” IMF Working Paper, pp 85-89 44 Jayaraman, T.K and C.K Choong 2006 Public debt and economic growth in the south pacific Island: A case study of Fiji Journal of Economy, vol 31, pp 329-350 45 Jha, R and Shaman, A 2004 Structural breaks, unit roots and cointegration: a further test of the sustainability of the Indian fiscal deficit Public Finance Review, vol 32, pp 196-219 46 Kao, C 1999 Spurious regression and residual-based tests for cointegration in panel data Journal of Economy, vol 90, pp 1-44 47 Kraay, Aart and Vikram Nehru 2004 When is External Debt Sustainable? World Bank Policy Research Paper No 3200 48 Laubach, T 2009 New Evidence on the Interest Rate Effects of Budget Deficits and Debt Journal of the European Economic Association, vol 7(4), pp 858-885 49 Lewis and Mizen 2000 Montery Economics P.177-78 50 Ley, Eduardo 2007 Fiscal Policy for Growth PRMED Knowledge Brief, June 113 51 Ministry of Finance of Vietnam 2016 Report on use and management of public debts (for the first round of meeting of Session XIV) 52 Ministry of Finance of Vietnam 2016 Report to Standing Committee 53 Modd Daud, S N., A H Ahmad and W N W Azman-Saini 2013 Does external debt contribute to Malaysia economic growth? Economic Research, vo 26, pp 51-68 54 Modigliani, F 1961 Long-Run Implications of Alternative Fiscal Policies and the Burden of the National Debt Economic Journal, vol 71, pp 730-755 55 Pattillo C., H Poirson and L Ricci 2004 What are the channels through which external debt affects growth? International Monetary Fund (IMF), Working Paper N 15 56 O’brien 1975 The Classical Economists 57 Orr, Edey and Kenedy 1995 The Determinants of Real Long-Term Interest Rates 17 Country Pooled-Time-Series Evidence Paris: OECD Publishing 58 Reinhart, C M and K S Rogoff 2010 Growth in a time of debt American Economic Review, 1000(2), pp 573-578 59 Robert J Barro 1989 The Ricardian Approach to Budget deficits 60 Saad, W 2012 Causality between economic growth, export and external debt servicing: The case of Lebanon International Journal of Economic Finance, vol 4, pp 134-143 61 Smyth, D and Hsing, Y 1995 In search of an optimal debt ratio for economic growth Contemporary Economic Policy, vol 13, pp 51-59 62 Taha, R and Loganathan, N 2008 Causality between tax revenue and government spending in Malaysia The International Journal of Business and Finance Research, vol 2, pp 63-73 63 Tasos, S 2014 Debt and economic growth: Is there any cause effect? An empirical analysis with structural breaks and granger causality fro Greece Theoretical and Applied Economics, vol 19, pp 51-62 114 64 Teles, V K and C Cesar Mussolini 2014 Public debt and the limits of fiscal policy to increase economic growth European Economic Review, vol 66, pp 1-15 65 World Bank and IMF 2004 Debt Sustainability in Low-Income CountriesFurther Considerations on an Operational Framework and Policy Implications 66 World Bank and IMF 2004 Debt-Sustainability in Low-Income CountriesProposal for an Operational Framework and Policy Implications 67 World Bank and IMF 2005 Operational Framework for Debt Sustainability Assessments in Low-Income Countries-Further Considerations 68 World Bank and IMF 2008 Staff Guidance Note on the Application o f the Joint Fund-Bank Debt Sustainability Framework for Low-Income Countries 69 World Bank and IMF 2010 Staff Guidance Note on the Application of the Joint Bank-Fund Debt Sustainability Framework for Low-Income Countries 70 Zafar Tqbal 200? Budget deficits & Public debt- Lessons for economies in transition 115 ... on finding new evidence to provide a better understanding, fill in the absence of research gap in the literature review by examining the impact of state budget deficit on government debt in Vietnam. .. building for Vietnam case with assumptions on scenarios of different debt indicators, the paper concludes: i) how state budget deficit impact on government debt; ii) solutions to control budget deficit. .. The State Budget expenditures include spending on socio-economic development, on ensuring national defense, security, operations of the State apparatus; spending on the payment of State debts; on