return icon Vietnamnet.vn

Vietnamese government plans to borrow US$20 billion in 2020

The government’s report to the National Assembly on the 2019 public debt and 2020 budget shows that it plans to mobilize VND460 trillion worth of capital, mostly to offset the deficit and repay principal.

Deputy Prime Minister Vuong Dinh Hue told the local press that the borrowing is part of the 5-year budget plan and annual plan to repay the principal and cover the deficit.

 

{keywords}



In 2015-2016, the public debt was 64.8 percent of GDP, nearly hitting the ceiling of 65 percent set by the National Assembly, while the payment ratio exceeded the safety line (25 percent), reaching 27.6 percent of total collection of the state budget.

But now the ratio of public debt to GDP has reduced to 56.1 percent in 2019 and is set to fall to 54 percent in 2020. Meanwhile, the ratio of government’s payment to budget collection is 18 percent.

In the past, domestic debt accounted for 40 percent and foreign debt 60 percent. But now the ratio is 60/40.

Now the ratio of public debt to GDP has reduced to 56.1 percent in 2019 and is set to fall to 54 percent in 2020. Meanwhile, the ratio of government’s payment to budget collection is 18 percent.

“Increasing domestic borrowing helps Vietnam avoid exchange rate risks. If Vietnam borrows money in foreign currencies, it will incur bigger debts when the dong depreciates,” he explained.


Regarding capital sources, Hue said in the past, 80 percent of government bonds were sold to commercial banks and finance institutions, but the figure has been cut by half.

Currently, capital is mobilized from insurers and investment funds that offer longer term loans and more attractive interest rates.

In 2018, for example, the government bond’s average term was 13.6 years, or four times longer than three years before. Meanwhile, the bond interest rates have decreased significantly in recent years, from 12 percent in 2011-2013 to 5 percent in 2017-2019.

As for borrowing VND460 trillion, Do Van Sinh, member of the National Assembly’s Economics Committee, said the borrowed money must be used effectively to contribute to GDP growth.

He mentioned the slow disbursement rate of public investment capital as a bottleneck which lowers capital use efficiency.

A government report said that VND192.130 trillion had been disbursed by the end of September, which means only 45 percent of the plan had been implemented.

Public investments account for 11 percent of GDP value and 32 percent of the society’s total investment in 2019. “Capital is an important factor for growth, therefore, the slow disbursement will have direct impact on the economic growth rate,” Sinh said.

Head of the HCM City Institute for Development Studies Tran Hoang Ngan said the government needs to control expenditures more tightly to reduce the budget deficit. Once the government’s borrowing decreases, the interest rate will also decrease.

Linh Ha

 

Expert warns of impact of Vietnam’s slowing industrial activities on GDP growth

Expert warns of impact of Vietnam’s slowing industrial activities on GDP growth

Vietnam's headline PMI from Markit’s survey and month-on-month IPI indicated slowing industrial activities in September, potentially causing negative impacts on GDP growth in the remaining months of the year.  

Vietnam’s GDP growing well despite global tensions

Vietnam’s GDP growing well despite global tensions

Vietnam is predicted to obtain the highest GDP growth rate in the region, but it is exposed to risks from the effects of global economic tensions.

MORE NEWS

Boosting international railway transport investment

The initial successes of the railway container transport network from Vietnam to Europe have inspired engagement with the international railway network.

Entertainment and cultural events of the week (November 28-December 4)

Upcoming entertainment and cultural events in Vietnam's major cities on November 28-December 4.

Wood manufacturers on alert for unpredictable new year prospects

While the United States is nearing a stance on imported wood that will affect Vietnam, domestic producers are being urged to modernise to survive.

Planning and Investment Ministry releases round-up of business results

The Ministry of Planning and Investment (MPI) has just released the Enterprises White Book 2022, which confirmed the ratio of loss-making foreign-invested enterprises (FIEs) is much more than other sectors.

Putting Vietnamese silk on the world map

VN has a long tradition of silk production and silk weaving. However, the Vietnamese silk brand is faint on the world map, a silent shadow behind foreign big brands.

Facilitating capital flows

Vietnam’s stock and property markets are struggling with volatile capital flows. If the situation is not properly tackled, dire consequences would be unavoidable.

Young singers entertain fans with new content

Young Vietnamese singers have been busy bringing new music content to audiences from now to the year end.

PM inspects infrastructure projects in HCM City

PM Pham Minh Chinh on November 27 inspected a number of infrastructure projects in HCM City, including the expansion of Binh Hung waste treatment plant, the construction of Ben Luc-Long Thanh expressway and the upgrading of National Highway 50.

Tiny traditional houses provide cultural model

To teach future generations about the symbolic meaning of the traditional house, an artisan in Plei Kte Village in the central province of Gia Lai has weaved many miniature communal houses from bamboo wicker.

Authentic Korean flavour in Hanoi

Dalgoogi Makchang is located in the Nam Trung Yen urban centre in Cau Giay District, which is dubbed as “little Korea”, about 10km from central Hanoi.

VIETNAM BUSINESS NEWS NOVEMBER 27

Vietnam, UK yet to tap potential of trade deal

Vietnam’s products make their brands

Vietnam is considered one of Southeast Asia’s most booming high-end product markets, worth nearly US$1 billion. Recent years have seen the domination of foreign products through official agents and hand-carried goods.

Van Long Lagoon in pristine beauty

As the largest wetland nature reserve with imposing mountain ranges amid a vast lake, Van Long Lagoon in Ninh Binh Province has been recognized as “the largest natural picture in Vietnam” by the Vietnam Book of Records.

VIETNAM NEWS HEADLINES NOVEMBER 27

NA Standing Committee to consider important issues at 17th session

UN official visits Vietnam Department of Peacekeeping Operations

UN Under-Secretary-General for Peace Operations Jean-Pierre Lacroix on November 26 visited the Vietnam Department of Peacekeeping Operations as part of his visit to Vietnam.
back_to_top