The Government’s debt obligations are often beyond estimates. For example, the estimate for debt repayments in 2011 was VND86 trillion, but in fact VND101 trillion was spent, said the Ministry of Finance.
Similarly, the estimate for debt repayments in 2012 was VND100 trillion, but the actual figure may be 16-26% higher than estimated, said economist Vu Dinh Anh.
The same happens to government bonds, the reputed largest public debt at present.
Under the five-year plan passed by the National Assembly, the annual government bond sales should be VND45 trillion. However, the actual figures are several times higher.
Anh cited the data of the finance ministry saying that nearly VND80.5 trillion worth of government bonds was issued in 2011. In the first ten months of 2012, government bond sales reached over VND115.8 trillion, up 80.8% year-on-year.
Credit institutions spent over VND183 trillion on government bonds in 2012, said the economist, citing the data provided by the central bank’s governor.
Meanwhile, according to the Asian Development Bank (ADB), the government bond market recorded a 54.6% growth year-on-year, hitting US$24 billion, mainly attributed to the increase of 71.5% in the treasury bill and government bond sales volume.
The Government aims to raise the ratio of outstanding bonds to GDP from 18% in 2011 to 38% in 2020, ADB remarked.
While delivering a speech at the Spring Economic Forum held by the NA Economic Committee in Nha Trang, Anh said: “To make up for budget deficit, Vietnam has to borrow loans at home and abroad.”
Since loans are used for non-business purposes, principal payments greatly depend on new loans, especially those from internal sources, he demonstrated.
He stressed: “The State budget is facing a vicious circle of debts with the Government’s debt obligations getting heavier.”
He is not the only one to give such a warning. Economists attending a recent seminar themed the European debt crisis and arising problems for Vietnam informed Vietnam’s public debt stood at US$128.9 billion, or 106% of GDP.
This figure is much higher than the one published by the finance ministry, which is US$66.8 billion, or 55% of GDP.
Nevertheless, international financial institutions seem more optimistic. Standard & Poor’s gave Vietnam a BB- rating and revised the country’s economic outlook from negative to stable in June last year, while Fitch rated Vietnam B+ in January this year and stated the economic outlook would be good.