return icon Vietnamnet.vn

What’s behind the government's $86 billion debt?

VietNamNet Bridge - The changes in debt structure, caused by the government's borrowing from domestic sources, and the rapid increase in total debts are two significant items included in the public debt bulletin.
VietNamNet Bridge - The changes in debt structure, caused by the government's borrowing from domestic sources, and the rapid increase in total debts are two significant items included in the public debt bulletin.

{keywords}

The bulletin released by the Ministry of Finance last week showed that the government’s debt had reached VND1,800 trillion, or $86 billion by the end of 2014.

Prior to that, reports by state management agencies showed that debts by the end of 2015 had reached 50.3 percent of GDP, while the National Assembly decided that the debt must not be higher than 50 percent in 2011-2015.

Analysts have noticed five issues: the two-fold increase in debt, debt structuring, reasons to borrow money, impact on the national economy and enterprises’ debt payment capabilities.

Regarding the debt structure, in the last five years, the government has shifted from borrowing overseas to borrowing from domestic sources. 

The changes in debt structure, caused by the government's borrowing from domestic sources, and the rapid increase in total debts are two significant items included in the public debt bulletin.
By 2014, the borrowing from domestic sources had reached VND1,000 trillion, which according to Tran Dinh Thien, head of the Vietnam Economics Institute, had increased by threefold compared with 2010.

The changes in the debt structure reveal the government’s new policy as the national economy has stepped over the middle-income threshold and foreign debts have reduced. 

However, Thien warned that the new policy may put pressure on the government’s debt payment, because domestic loans are mostly short-term.

In 2016, the government plans to borrow VND452 trillion, or $20 billion, an increase of VND16 trillion over 2015. It is estimated that half of the amount would be borrowed through government bond issuance, while the remaining would be from ODA (official development assistance), insurance funds, SCIC (state capital investment corporation) and international bonds.

In 2010-2015, the government borrowed 846.900 trillion through bonds.

Reports showed that the budget deficit in 2015 exceeded VND180 trillion, 13 times higher than 2006. The figure was VND83 trillion in the first six months of the year (VND425.600 trillion in receipts and VND508.500 trillion in expenditures).

The Ministry of Planning and Investment said that the current budget revenue was not high enough to cover regular expenses and debt payments which have increased from 50 percent to 65 percent of total expenses in recent years.

Analysts have repeatedly warned about the negative impact the increasingly high public debt may have on the national economy. As the government pays 6-7.8 percent per annum for government bonds, there will be no more capital for businesses.

However, deputy chair of the State Securities Commission Nguyen Thi Lien Hoa thinks that businesses could borrow capital if they have good business plans.


VNE

MORE NEWS

Vietnam to attend ASEAN Tourism Forum 2023 in Indonesia

Vietnam will participate in ASEAN Tourism Forum (ATF) 2023 themed “ASEAN: A Journey to Wonderful Destinations”, and the Travel Exchange (TRAVEX) trade fair in Yogyakarta, Indonesia from February 2 – 5.

Hanoi and Ho Chi Minh City among safest cities in Southeast Asia

Hanoi and Ho Chi Minh City have both been included in a list of the safest cities in Southeast Asia, as compiled by statistics site Numbeo.

Action plan issued to accelerate national anti-corruption strategy building

Deputy Prime Minister Le Minh Khai, head of the steering committee on building the national anti-corruption strategy by 2030, has signed a decision on the issuance of the committee’s action plan.

VIETNAM BUSINESS NEWS JANUARY 31/2023

Latest guidance on one-way money transfers from Viet Nam

HCM City proposes removing hindrances to develop real estate market

Ho Chi Minh City authorities made a proposal to clear bottlenecks for healthy and sustainable development of the real estate market.

More high-value foreign investment projects needed as tax policies change

Vietnam needs to improve FDI quality, attracting high-tech projects that promise to bring higher added value.

Khmer's ginger cake of love and faithfulness

The ginger cake of the Khmer ethnic group in Soc Trang Province is a beloved traditional treat that is often offered to ancestors on important anniversaries such as the Tet (Lunar New Year) festival.

HCM City promotes digital transformation in education

Digital transformation is considered key to improving education and training quality, as proven by the effect of HCM City actively applying digital transformation over the past five years.

Hanoi to close fruit shops lacking proper food safety preparations

The capital city of Hanoi encourages the expansion of safe fruit businesses while clamping down on fruit shops that do not comply with food safety protocols, specifically street vendors.

Dutch diplomat donates Vietnamese paintings to national museum

Vietnam National Fine Arts Museum has received two paintings from former deputy ambassador Ellen Berends of the Netherlands to Vietnam.

Hanoi's unique rice cooking contest in photos

On the 8th day of the first lunar month each year (January 29, 2023), Thi Cam village in Hanoi’s Nam Tu Liem district holds a rice cooking contest.

Hanoi proceeds with park revitalization program

The implementation of Hanoi leaders’ promise to revive parks has begun: admission to Thong Nhat Park is now free after the removal of the fence, and Con Coc Flower Garden has a new look. However, there are still many things that need to be done.

Vietnamese farmers on board the ‘digital agriculture train’

In the digital era, next-generation farmers can fertilize and water their fields in Binh Phuoc from afar, even in a different country.

Vietnam forecast to become second-largest economy in Southeast Asia by 2036

2023 is predicted to be the year of many challenges for the Vietnamese economy due to the gloomy outlook of the global economy and multiple crises.

Prenn Pass leading to Dalat to be closed for expansion

Vehicles will be banned from using the seven-kilometer-long Prenn Pass to travel to Dalat City as work on the pass upgrade and widening project begins on February 6.
back_to_top