Mon. May 20th, 2024

Vietnam’s total outstanding public debt was equivalent to 56.3
percent and 54.9 percent of its GDP in 2010 and 2011 respectively,
according to Bulletin No. 1 recently issued by the Ministry of Finance.

The country’s external debt was equal to 42.2
percent of GDP in 2010 and 41.5 percent of GDP the following year.
Outstanding Government debts are 44.6 percent and 43.2 percent of GDP.

The Government’s debt obligations were 17.6 percent
and 15.6 percent of the annual total State budget collection in 2010 and
2011 respectively.

The ministry’s Department of
Debt Management and External Finance said that the 2010 statistics were
adjusted after the National Assembly approved the 2010 State budget
balance. The statistics for 2011 may be corrected after the year’s State
budget balance is approved.

According to the
Strategy on Public Debt and Foreign Debt in the Period of 2011-2020 and
Visions to 2030 issued in 2012, public debt, including Government debt,
Government-guaranteed debt and local authority debt must not exceed 65
percent of GDP by 2020. The Government’s outstanding debt must not
exceed 55 percent of GDP, and national foreign debt not more than 50
percent of GDP.

The Government’s direct debt obligations
(excluding refunding) must not exceed 25 percent of the annual total
State budget collection, and national foreign debt obligations must be
below 25 percent of the turnover generated from exporting goods and
services.

With 2011’s public debt of 54.9 percent of GDP, it is
said that the country’s current public debt still meets safety standards
in line with international practices. Reports by the International
Monetary Fund (IMF) and the World Bank (WB) estimated that Vietnam’s
public debt was 48.8 percent of GDP in 2012 and will be 58.2 percent in
2013.

Under international practices, it is
considered safe if the Government’s debt obligation is less than 35
percent of the total State budget collection. In fact, the rate is
between 14 and 16 percent. Vietnam’s figure was 15.6 percent in
2011, two percent lower than that of the previous year.

One
of the objectives the Ministry of Finance has paid special attention to
in recent years is the safe and sustainable management of public debt.

The strategy states that to meet the great demand
for socio-economic development capital, it is necessary and essential to
mobilise domestic and foreign loans, especially when internal sources
are insufficient.

The mobilisation of loans and debt
clearance must be within the safety standards relating to the country’s
public debt, governmental debt and foreign debt in order to guarantee
national financial security.

Domestic and international
loans can be used to redeem budget overspending so that it is possible
to reduce budget overspending (including governmental bonds) to below
4.5 percent of GDP by 2015, around four percent of GDP in the period of
2016-2020 and about three percent of GDP after 2020.

Key measures to realise the strategy include perfecting institutions,
policies and instruments to manage debt; further improving efficiency of
loan mobilisation and use; closely controlling the grant and management
of Government guaranteed debts; and enhancing supervision and
management of risks.

Debt information must be made
public and transparent through reports. Organisational apparatus should
be completed, administrative reforms accelerated, and debt management
agencies modernised for higher efficiency.-VNA

By vivian