Thanks to the government’s efforts and positive economic performance, the growth rate of public debt has been cut by half, coming from 18 percent in the 2011 2015 to 8 percent as of present.
As of the end of 2019, Vietnam’s public debt is estimated at 56.1 percent of the GDP, lower than the rate of 58.4 percent recorded last year, keeping its declining trend over the past few years, according to a government’s report.
Additionally, government debt is on track to reach 49.2 percent of the GDP, down from 50 percent one year earlier and foreign debt at 45.8 percent compared to 46 percent in 2018.
The report suggested all corporate loans from foreign source are within the limit approved by the government in 2019, ensuring foreign debt to GDP ratio below the 50 percent threshold set by the National Assembly.
All figures are within the limit and lower than the national financial plan in the 2016 2020 period, with the ceiling for public debt, government debt and foreign debt at 65 percent, 54 percent and 50 percent, respectively.
According to the government, in the first nine months of 2019, the government paid VND237.47 trillion (US$10.2 billion) in debt, equivalent to 71.3 percent of the year’s target, including VND196.28 trillion (US$8.43 billion) for domestic sources and VND41.18 trillion (US$1.77 billion) for foreign sources.
The government’s financial obligation in principal and interest rate payments are within the estimate with sufficient amount and as scheduled, stressed the report.
Moreover, the payment amount could be lower than the estimate, due to a delay in applying a fast payment clause of the International Development Association (IDA), the World Bank’s fund for low income countries, until July 1, 2020.
For 2020, the government targets public debt to further decline to 54.3 percent of the GDP, government debt at 48.5 percent and foreign debt at 45.5 percent.
In the context of tightened global capital market, the financial obligation of Vietnamese government is forecast to increase correspondingly. However, the average interest rate of government’s foreign loans remains at low level of 2 percent annually until December 31, 2019, due to 96 percent of the loans are preferential.
Such favourable condition helps maintain the ratio of debt payment to state budget revenue in safe level, reaching 19.5 20.5 percent as end-2019, and lower than the threshold of 25 percent set by the National Assembly. The financial obligation, however, is expected to reach 23 percent in 2020.
Minister of Finance Dinh Tien dung said thanks to the government’s efforts and positive economic performance, the growth rate of public debts has been cut by half, coming from 18 percent in the 2011 2015 to 8 percent as of present.
“More importantly, public debt has been restructured towards greater sustainability, with the average maturity date for bonds and loans from domestic sources at nearly seven years, while in the 2011 2012 was 2.9 years. The average interest rate for bonds in the 2011 2013 was 12 13 percent annually, but in the last two years, such rates declined to 4.6 percent with a 13 years of maturity date,” Dung said.
In 2019, state budget revenue from three major economic sectors (state firms, FDI and private sectors) is expected to expand 10.9 percent, higher than economic growth and inflation rate, as well as similar rate in previous years (9.9 percent in 2016 and 5.6 percent in 2017 and 9.7 percent in 2018).
At the same time, state budget expenditure was controlled positively, in which expenditure for development has been increasing and is expected to reach 26.9 percent of total expenditure by 2020, or 27 28 percent for the 2016 2020 period, higher than the estimate. Meanwhile, regular spending in 2020 could account for 60.5 percent of total spending, much lower than the target of below 64 percent.
