Ministry says public debt remains safe

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VietnamPlus English - 27 month(s) ago 4 readings

Ministry says public debt remains safe

Vietnam 's public debt index currently stands at a moderate and safe level, made up of mainly long-term debt and debt with preferential interest rates, according to Government reports.

Vietnam 's public debt index currently stands at a moderate and safe level, made up of mainly long-term debt and debt with preferential interest rates, according to Government reports.

The Ministry of Finance confirmed the information against rumours that the country's debt stood at a high level in comparison with its Gross Domestic Product (GDP), according to the Chinhphu.vn website.

As of December 31 last year, foreign debt was estimated at 1,042 trillion VND (49 billion USD), or 41.5 percent of GDP last year, and within the safety limit. Under a National Assembly resolution, Vietnam will control outstanding public debt at below 65 percent of its GDP by 2015 while Government and national debt is reduced to below 50 percent, according to ministry statistics.

The World Bank and International Monetary Fund have recognised that Vietnam 's debt levels were under control and that the country fell outside the Debt Initiative for the Heavily Indebted Poor Countries (HIPCs) group.

Of the country's total debt, official development assistance (ODA) loans accounted for 75 per cent, with low interest rates in the majority.

Forty-year World Bank loans have 10-year grace periods with an interest rate of 0.75 percent per year while 30 year Asian Development Bank loans also have 10 year grace periods, but with an interest rate of 1 percent. Thirty-year loans from the Japanese Government have 10-year grace periods with an interest rate of between 1 and 2 percent per year.

Currently, both domestic and overseas debt has been paid, with no bad debt in existence. Moreover, the borrowing structure has been changed by minimising foreign debt and increasing domestic debt to reduce dependence on overseas sources.

Compared to other developing countries with the same BB credit rating, Vietnam 's debt index is at average level.

To comply with safety limit objectives related to public debt indicators adopted by the National Assembly, the Ministry of Finance has implemented measures to control public debt repayments, amongst others.

The Ministry will continue to manage, supervise and allocate loans towards the development of infrastructure. It will closely control preferential foreign loans and keep watch on the efficient use of loans and debt payments while minimising State budget subsidies.-VNA

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