Vietnam’s public debt ratio at 54.6% of GDP in 2011: Finance minister

As of December 31, 2011, Vietnam’s public debt ratio will be at 54.6% of gross domestic product (GDP), Finance Minister Vuong Dinh Hue said at the National Assembly meeting this morning on Oct. 28, adding that by the end of 2012, this number is expected to reach 58.4% of GDP.
However, Hue also noted, these statistics were calculated based on assumptions of Vietnam’s growth projected at 6% next year. If the economy achieves higher growth rate (such as 6.5%), the public debt ratio will be lower.

According to Hue, most of Vietnam’s debts are development aids and concessional loans, so the repayment periods remain long enough with very low interest rates. Specifically, 75% of Vietnam’s debts are the official development assistance (ODA) loans, and 19% are other preferential loans. These loans often have durations of decades with the interest rates ranging from 0.75 to 2% a year, and only 7% are commercial loans.

Regarding the methodology of measuring public debts, Hue said that unlike practices of developed countries as they calculate public debts based on the cash flow values, Vietnam’s debts are calculated on the nominal value. If converted to cash, the value of Vietnam’s current debt levels may be lower down.

As for government debts, Hue said that the government’s foreign debts have now accounted for 58% of the total debts and tend to decrease. Meanwhile, domestic debts accounted for 42% and tend to rise.

The finance minister acknowledged that this is a positive signal because changing the structure of debts will help Vietnam to become more proactive in debts, reducing its dependence on foreign countries.

For debt obligations, Hue said that the government sets aside about 14-16% of total state budget to repay debts annually. Particularly, in 2012, this amount is equivalent to 100 trillion dong. – Source: Vietbiz24.com

Tags: Vietnam public debt

Posted by VBN on Oct 29 2011. Filed under Banking-Finance, Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry