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Vietnam’s public debts continue rising

November 6, 2012 IntellAsia
Vietnam’s public debts accounted for 55.4 percent of Vietnam’s GDP by late 2011, down 1.9 percent against late 2010; however, the rate is forecast to be higher in coming years, according to a government report.

The rise has been blamed on higher capital demands for infrastructure projects, especially in the context when the nation’s economic growth is expected to reach just 5.2 – 5.7 percent compared to the set target of 6 – 6.5 percent.

Japan remains Vietnam’s biggest lender, making up 17 percent of the country’s total foreign debts, followed by the World Bank with 13 percent and the Asian Development Bank (ADB) with 8 percent.

The report also showed that by the end of 2011, Vietnam got a total official development assistance (ODA) and preferential loan from foreign countries of around USD71.7 billion. Of the sum, USD54.1 billion is non-refundable aid. To date, USD33.41 billion of ODA has been disbursed.

The international loans have mostly been poured into electricity, petroleum, shipbuilding industry, water supply, highway, aviation, seaport and urban infrastructure projects.

According to the report, government projects using foreign loans have operated effectively and have made their debt repayments on time. By late 2011, only 55 of 580 projects which received foreign loans failed to meet their repayment schedules, which were attributed to market price changes and USD/VND exchange rate changes, particularly agricultural projects.

The government said debt repayments had been maintained at a safe level over the past ten years, accounting for less than 20 percent of the total budget revenues.

The government said Vietnam’s public debts would be controlled to account for not more than 65 percent of the national GDP by 2015.

The government would consider lending guarantees for urgent projects approved by the prime minister.

The government has pledged to ensure due repayment schedules would not to affect its international commitments.