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Sunday, June 16, 2024

Vietnam’s public debt-to-GDP ratio declines

By Nguyen Tan

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HCMC – Vietnam’s public debt-to-GDP ratio has been inching down steadily since 2018, at 37.4% of the country’s gross domestic product (GDP) as of 2022.

Foreign debt accounts for 36.1% of the total, according to the Ministry of Finance.

The Government’s total borrowing in the period from 2021 to 2025 is projected to reach 42.9% of the approved plan, with direct debt service obligations totaling 53.3% of the planned amount.

Local government borrowing stood at 26.3% of the NA-approved plan, with debt service obligations at 41.1%. Both central and local governments are adhering to approved debt safety limits in the 2021-2023 period.

Government bonds issued in 2021, 2022 and 2023 have an average term of nine to 11 years, in accordance with the National Assembly’s (NA) Resolution 23/2021, with the rate of government-guaranteed debt increase lower than the prior year’s nominal GDP growth.

The ministry also highlights challenges in public investment disbursement, particularly in funds sourced from Official Development Assistance (ODA). Some investment projects have been facing delays, impacting project progress.

Vietnam is also grappling with external pressures, including rising borrowing costs and unfavorable market conditions. These factors have led to increased interest rates and have put downward pressure on the Vietnamese Dong, affecting the nation’s ability to meet its debt obligations, particularly those in U.S. dollars.

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