Public debt in Vietnam under control

HANOI: Vietnam managed to control public debt within a safe level with gradually slowing year-on-year increases. However, according to the Finance Ministry, the economy was severely hit by the Covid-19 pandemic in the past three years.

The finance ministry said that the process of raising capital from public debts for the socio-economic recovery programme needed to pay attention to efficient use of capital and safety and the sustainability of the state budget and public debt in the medium and long term.

Statistics of the ministry’s Department of Debt Management and External Finance showed that the public debt of Vietnam dropped from 63.7% of gross domestic product (GDP) in 2017 to 55.9% in 2020. When the GDP was revised, the public debt stayed at 43.7%.

The department’s deputy director Vo Huu Hien said that the policy of limiting the issuance of government guarantees for new loans, improving the efficiency of official development assistance and foreign concessional loans helped bring the public debt on a decreasing trend.

The percentage of foreign loans in the government debt also fell from 60% in 2010 to 40% in 2016 and nearly 33% at the end of 2021, which contributed to reducing the foreign exchange rate risk, Hien said.

Government bonds accounted for 86% of the domestic debt and issuances since 2017 were all of the five-year term or longer.

According to Dinh Trong Thinh from the Academy of Finance, the public debt level stayed within the limit approved by the National Assembly, theoretically meaning that Vietnam could increase borrowing to meet development demand.