Viet Nam expected to borrow quadrillion VND in 2020-2024
The Ministry of Finance has recently submitted a plan for public debt management to the Prime Minister, estimating total government debt between 2020 and 2024 at a maximum of quadrillion VND (87.6 billion USD).
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| Nhat Tan Bridge, a project financed by Japanese ODA loans. (Photo: VNA) |
The borrowed money will come from government bonds, official development assistance (ODA) loans, preferential loans and other sources.
It will cover the Central budget deficits of around 1.3 quadrillion VND, repay about 612 trillion VND of government debt, and allocate approximately 117 trillion VND of ODA loans to localities and public units.
The Government will need to take out a loan of nearly 674 trillion USD in the 2022 fiscal year to cover the Central Budget deficit of 450 trillion VND, repay 196 trillion VND of government debt, and allocate 27 trillion VND of ODA loans.
As State Budget deficits are expected to increase by 240 trillion VND in 2022 and 2023 to support socio-economic recovery, Viet Nam’s public debt is forecast to hit 46-47 per cent of GDP in 2024, and the ratio of government debt to be no more than 24 to 25 per cent of State revenue.
Recently, central banks worldwide have raised interest rates and implemented contractionary monetary policies. Notably, the US Federal Reserve has decided to hike its rates for the first time since 2018.
Economic expert Can Van Luc was concerned that the moves would have a noticeable impact on the Vietnamese economy from Q4/2022 and create upward pressure on USD/VND exchange rates, increasing the debt burden denominated in USD.
Accordingly, he urged the Government to keep a close watch on external debts every time the US Federal Reserve adjusted its rates and called on the State Bank of Viet Nam to proactively and flexibly manage the foreign exchange market to keep inflation and exchange rates stable.
(Source: VNS)
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