Tiếng Việt
普通话
Most of the five year-maturity debts, including those of ODA, would reach their respective maturity by 2020, putting Vietnam under growing pressure for repayment, according to Vo Huu Hien from the Department of Debt Management and External Finance under the Ministry of Finance (MoF).
Vietnam’s graduation from the International Development Association (IDA), the World Bank’s fund for low income countries, in 2017 has led to less favorable loan terms, Hien said at a press briefing discussing Vietnam’s public debt on June 7.
However, as its financing needs for further development are still growing, a decline in concessional loans is expected to force Vietnam to tap in the capital markets, Hien added.
As of the end of 2018, Vietnam’s public debt hit the lowest since 2015 at 58.4% of the GDP, much lower than the projection of 63.9% made by the Ministry of Planning and Investment (MPI) last August and the ceiling of 65% of the GDP set by the National Assembly.
Additionally, government debt was lower than the threshold of 54% of the GDP, while the country’s debt repayment in 2018 accounted for 15.9% of total budget revenue, lower than the 25% limit. Foreign debts stood at 46% of the GDP, lower than the 50% cap.
With all debt indicators under control, the MoF attributed the result to high GDP growth rate and stable macro-economic conditions.
Meanwhile, state budget revenue in 2018 was 7.8% higher than the estimate and the budget deficit was kept lower than the estimate of 3.7% of the GDP, relieving pressure for government in further borrowing.
Vietnam’s tightened control on government-guaranteed debts is also a factor contributing to a reduction in public debt, said the MoF’s representative.
In the coming time, the MoF expected a greater focus on developing Vietnam’s domestic capital and government’s bond markets, as well as attracting long-term investors joining Vietnam’s markets.
At a discussing session at the National Assembly on May 22, Deputy Prime Minister Vuong Dinh Hue said the government is not considering taking additional loans due to high repayment pressure.
Minister of Finance Dinh Tien Dung said it is too early to say Vietnam’s public debt is at safe level, especially when the available fund could only cover the interest rate, not the principal amount.
More importantly, the efficiency of projects financed by public investment fund, including state budget, government bonds or ODA, remains questionable, Dung continued.