Public debt under control: Finance Ministry

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% of gross domestic product (GDP) by the end of this year, down 63.7% from the end of 2016 and below the ceiling of 65%.

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

Of public debt, Government debt was expected to account for 84.8%, Government-guaranteed debt 14.1% and debts of local authorities nearly 1% 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% of the Government’s capital demand. The Government’s domestic debt was projected at 60% by the end of 2018 and foreign debt at 40%, compared to 45% and 55% 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 VND171.6 trillion (US$7.5 billion) was disbursed in 2016-18, leaving a limit of VND128.4 trillion for 2019-20 period.

Long said that although ODA remained an important capital source, despite decreasing from 36.6% of State investment to 27.8% 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.