Public debt under control: Finance Ministry

Hanoi (VNS/VNA) – Vietnam’s public debt remains under the ceiling limit, according to the Ministry of Finance.

Truong Hung Long, Director of the ministry’s Department of Debt Management and External Finance, said public debt was forecast to stand at 61.4 percent of gross domestic product (GDP) by the end of this year, down 63.7 percent from the end of 2016 and below the ceiling of 65 percent.

Long said public debt slowed down in 2016-18, rising at an average rate of 10 percent, compared to the rate of 18.4 percent in 2011-15.

Of public debt, Government debt was expected to account for 84.8 percent, Government-guaranteed debt 14.1 percent and debts of local authorities nearly 1 percent by year-end.

Long said public debt was structured towards increasing domestic loans and long-term loans while easing pressure on short-term payments and lowering borrowing costs in 2016-18.

The Government consistently reduced the dependence on foreign loans, a key move with Vietnam becoming a middle-income country.

Statistics showed that domestic loans met 76 percent of the Government’s capital demand. The Government’s domestic debt was projected at 60 percent by the end of 2018 and foreign debt at 40 percent, compared to 45 percent and 55 percent at the end of 2015, respectively.

Vietnam focused on raising capital through issuing Government bonds, according to Long.

Long said the percentage of Government bonds of 10-30 year terms increased from 16 percent in the 2011-15 period to 86.4 percent in the first nine months of this year while bond yields gradually fell from 12 percent in 2011 to 4.5 percent, contributing to lowering borrowing costs for the Government.

Regarding the disbursement of official development assistance (ODA), a total of 171.6 trillion VND (7.5 billion USD) was disbursed in 2016-18, leaving a limit of 128.4 trillion VND for 2019-20 period.

Long said that although ODA remained an important capital source, despite decreasing from 36.6 percent of State investment to 27.8 percent in 2017, due to the limited budget for development investment while demand for infrastructure development was huge.

Long said the Ministry of Finance would continue to tighten public debt management and enhance efficiency in using State capital.

In addition, focus would be placed on promoting the development of the domestic capital market, tightening loans of local authorities as well as foreign debts of enterprises.

The restructuring of public debt to 2020 and in the next five-year period must be implemented with the restructuring of the economy, renovating the growth model and improving national competitiveness at the centre, Long said.-VNS/VNA