Vietnamese Tiếng Việt | Wednesday, February 20, 2019 | Advertise with Us
Text Size

High public debt – the haunting worry

(0 votes, average 0 out of 5)

Analysts say Vietnam is facing dual difficulties: it has to prepare for the period when ODA (official development capital) capital will decrease, and must also bear pressure as 50 percent of domestic debts will be due in three years. 

vietnam economy, business news, vn news, vietnamnet bridge, english news, Vietnam news, news Vietnam, vietnamnet news, vn news, Vietnam net news, Vietnam latest news, Vietnam breaking news, public debt, foreign debt, ODA

50 percent of domestic debts will be due in three years


The Ministry of Planning and Investment (MPI) has estimated that the public debt per capita of VND35 million in 2018 would increase to VND40 million by 2020.

However, as commented by Ngo Tri Long, former director of the Price & Market Research Institute, when the public debt is still within the safety line, it is more important to discuss the payment capability.

The Ministry of Finance’s (MOF)  bulletin in April 2016 showed that Vietnam’s public debts increased by three times in 2010-2015. 

The report from the World Bank and MOF released in 2017 showed that Vietnam was among the countries with the fastest growing ratio of debt on GDP, about 10 percent within five years.

It is estimated that Vietnam’s public debt by 2026 would be twice as much as 2016, which was VND2,000 trillion. 

As such, Vietnam’s public debt would be higher than the average level of average-income countries, ASEAN, Latin America and Africa.

Meanwhile, Vietnam is facing two challenges. First, the ODA capital will be decreasing as Vietnam is no longer classified as a poor country. Second, it will have to arrange money to pay domestic debts, 50 percent of which will mature in three years.

Tightening the belt to cover receipts/expenditures was a good solution to control the public debt. However, this has been an impossible mission for Vietnam for many years. The annual budget overexpenditure is equal to 3-4 percent of GDP.

According to MOF, the state budget collection in the first half of 2018 was VND651.7 trillion dong, while it had to spend VND59.3 trillion to pay debts. As such, the state budget had to pay VND330 billion for debts each day.

The second solution to control the public debts – expanding sources of revenue – is also not feasible. An MOF report showed that revenue in 2016 was higher than estimates in some fields – industry & trade and non-state economic sector (9.4 percent), housing and land (97.5 percent), and registration tax (19.8 percent). 

This means that the revenue increase did not come from improvement in the inner strength of the economy. The ICOR in 2011-2015 was two times higher than that in 1996-2000, a clear sign of the decline in production capacity.

The biggest concern, according to analysts, is the modest increase in the collection from import/export activities, just 0.5 percent higher than estimates. Meanwhile, exports are the major contributors to GDP growth.


Source: VNN

Maybe You Also Interesting :

» Tran Thuong Temple’s food distributing festival attracts thousands

Tran Thuong Temple’s food-distributing festival took place in the northern province of Ha Nam on February 18 or the 14th day of the first lunar month.

» Mass release of aquatic species underway in Kien Giang

A mass release of aquatic species into Dong Ho lagoon took place in the Mekong Delta province of Kien Giang’s Ha Tien city on February 19, aiming to...

» Deputy Prime Minister Pham Binh Minh to visit Germany

Deputy Prime Minister and Minister of Foreign Affairs Pham Binh Minh will pay a visit to Germany from February 20-21.