Vietnam’s current public debt totals over US$120 billion and is projected to double in ten years, said a financial expert at a conference in Hanoi on Wednesday.
The conference on government debt was held by the Faculty of Finance at the Hanoi University of Business and Technology, attracting financial and policy experts to discuss a growing concern in the country.
Finance Faculty Dean Nguyen Cong Nghiep asserted in his opening remarks that the burden of Vietnam’s public debt had been on the rise and was threatening the government’s ability to repay.
“With our current total public debt at VND2,700 trillion [$120.54 billion] and the yearly interest rates of 1.7 percent for foreign ODA [official development assistance] loans and 7.1 percent for domestic loans, Vietnam’s public debt will double in ten years,” Nghiep stated.
Dr. Le Dang Doanh, former president of the Central Institute for Economic Management under the Ministry of Planning and Investment, also noted that the country’s public debt has been rising too quickly - twofold in just the five years between 2010 and 2015.
Vietnam’s government debt to GDP ratio has breached the limit of 50.3 percent, Doanh said, while government revenue is consistently insufficient for its expenditure.
The country’s GDP was $186.2 billion in 2014 and is expected to grow 6.6 percent this year, according to the World Bank.
Experts at the conference suggested that the government adopt measures to reduce budget deficit to four percent of the nation’s GDP in order cut down on public debt.
“The government needs to sketch plans to restructure its budget and provide transparent information on Vietnam’s precise and total amount of public debt,” Dr. Doanh suggested. “A backup plan must also be drafted as a contingency response to a worst case scenario of insolvency.”