Vietnam’s public debt will fall to 56.1 percent of GDP by the end of 2019 from 58.4 percent last year, according to the government’s latest report.
Meanwhile, government debt to GDP ratio is expected to decrease to 49.2 percent from 50 percent in 2018 and foreign debt is expected to decline to 45.8 percent from 46 percent in 2018, the report shows.
The government forecasts that public debt and government debt will be likely reduced to 54.3 percent and 48.5 percent, respectively, in 2020.
Pressure of repayment obligations has been eased thanks to the decrease of public debt growth, from 18 percent between 2011 and 2015 down to 8 percent over the past years, said minister of Finance Dinh Tien Dung.
More importantly, the average annual interest rate for government bonds and domestic loans fell from 12-13 percent in the 2011-2013 period to 4.6 percent in recent years, Dung underlined.
State budget revenues from State-owned enterprises, FDI and non-State sectors was estimated to grow by 10.9 percent this year, higher than the GDP and inflation growth rates, compared to 9.9 percent in 2016, 5.6 percent in 2017, and 9.7 percent in 2018, Dung said.
Dung added that regular budget spending is expected to account for 60.5 percent of total spending in 2020 compared to the preset goal of 64 percent.
Foreign currency reserve rose to $73 billion from $31 billion at the start of the current government’s tenure (2016).
In addition, thanks to the government’s drastic efforts, the ratio of non-performing loans of credit organisations dipped to 4.84 percent as of August 2019 compared to 5.85 percent in 2018, 7.36 percent in 2017 and 10.08 percent in 2016, of which credit institutions’ bad debts accounted for 2 percent, according to deputy Governor of the State Bank of Vietnam Nguyen Kim Anh.
With the above positive trend, the government determines to bring the ratio of non-performing loans down to below 3 percent by the end of 2020.
Positive credit outlook
Last May, Fitch Ratings revised Vietnam’s credit outlook to “positive” from “stable” while affirming the Southeast Asian country’s sovereign credit ratting at “BB”.
The revision of the outlook reflected an improving track record of of economic management, strengthening external buffers from persistent current account surpluses, falling debt levels, high economic growth rates and stable inflation.
In April this year, S&P Global Ratings raised Vietnam’s sovereign credit rating to BB from BB- for the first time after nine years.
The upgrade is a reflection of the Vietnamese economy’s rapid expansion and improvements in the government’s “institutional settings”, according to the S&P.
