The government has outlaid VND213.8 trillion ($9.4 billion) on paying debt interest and principal since the beginning of the year to October 15, equal to 4.18 per cent of the country’s GDP, according to official data.
VND79.9 trillion ($3.5 billion) was paid in interest and a further VND133.9 trillion ($5.9 billion) on principal, a General Statistics Office (GSO) report showed.
The government had collected VND865.6 trillion ($38.13 billion) for the State coffers this year as at October 15 while outlaying VND960.3 trillion ($42.3 billion) on expenditure, resulting in a fiscal deficit of VND94.7 trillion ($4.17 billion).
Minister of Finance Dinh Tien Dung told a hearing before the National Assembly’s Standing Committee earlier this month that the ministry is likely to tame the fiscal deficit at 3.42 per cent of GDP this year, lower than the 3.5 per cent target.
“This is the lowest budget deficit ratio in the past ten years, helping to keep public debt within the safety zone,” said Mr. Nguyen Duc Hai, Chairman of the legislature’s Finance and Budget Committee.
The average term of bonds reached 13 years in the first nine months of this year, up from 8.7 years in 2016 and 2.97 years in 2012.
The average interest rate has been brought down to 6 per cent from 6.28 per cent in 2016 and 12 per cent in 2011, Mr. Dung said.
According to a recent government report, the country’s public debt is projected to total VND3,128.3 trillion ($137.8 billion) this year, or 62.6 per cent of GDP, with government debt accounting for 82.8 per cent, government-guaranteed debt 15.94 per cent, and local debts the remaining 1.26 per cent.
Vietnam’s foreign debt leaped 6.5-fold between 2001 and 2015, mainly due to weaknesses in managing and using loans.
Some debtors with government-guaranteed loans also lost their repayment capacity, passing on the burden to the government.
At end-2016, Vietnam’s public debt stood at 63.7 per cent of GDP, up from 62.2 per cent in 2015 and 50.1 per cent in 2011, while government debt and foreign debt stood at 52.6 per cent and 44.3 per cent of GDP, respectively.
The World Bank has forecast that Vietnam’s public debt will climb to 64.4 per cent this year and 64.7 per cent in 2018.
The mounting debt will impose a steadily increasing burden on the economy and make it increasingly difficult to cut the budget deficit, the bank said in a report released last year.
Photo: CBR Investment AG