VietNamNet Bridge – To make up the budget deficit, the government needs to issue bonds to raise funds from the public rather than borrow money directly from the central bank, economists say. Economists have voiced their concern about the government’s plan to borrow money from the national foreign exchange reserves being controlled by the State Bank. The borrowing is unheard of in Vietnam. Most of the central banks in the world are independent of government. The independence allows central banks to pursue reasonable policies for steady economic growth and long term sustainable development. If central banks are not independent of governments, they may excessively loosen the monetary policies as requested by governments, which may lead to high inflation. In general, governments only borrow money for very short time. For example, they borrow money when the tax collection revenue is low and then will pay the money back when the tax collection improves. In general, the disbursement and the debt payment finish within just one fiscal year. And the restriction in lending to governments is animportant factor to ensure the central banks’ prestige, which is necessary to create efficient monetary policies. As such, it would not be in accordance with international…
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Governments can only issue bonds to raise funds for investment: economists have 250 words, post on at May 18, 2015. This is cached page on VietMaz. If you want remove this page, please contact us.