Vietnamese Tiếng Việt | Wednesday, May 22, 2019 | Advertise with Us
   
Text Size

High public debt – the haunting worry

Share
(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 :

» Japan’s medals to be presented to Vietnamese citizens

The Japanese Government will present Japan’s Orders to two Vietnamese citizens.

» Vietnam banks’ charter capital increases 63% in 7 years to US$24.72 billion

The combined charter capital of Vietnam’s banking sector reached US$24.72 billion as of the end of March, up 0.45% against end-2018 and up 63.5% against...

» Exhibition to gather big names of Vietnamese art

An exhibition of veteran artists representing different styles of Vietnamese fine arts will open from May 30 to June 15 in Hà Nội.

Economy Latest

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7

Our Latest Posts

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7

Login