Ensuring national public debt safety in 2024
Vietnam terminates ODA loans with highly preferential conditions and switched to loans under market conditions. Illustration: ST |
Debt indicators are within the ceiling and safety threshold
Based on the estimated implementation of borrowing, repayment of public debt and foreign debt of the country in 2024, it is expected that debt indicators by the end of 2024 will be within the ceiling and safety threshold approved by the National Assembly.
Data from the Government's report shows that the estimated public debt in 2024 is 36-37% of GDP (the target according to Resolution 23 of the National Assembly is below 60%); Government debt is 33-34% of GDP (the target is below 50%); the estimated foreign debt of the country is 32-33% of GDP (the target is below 50%); the Government's direct debt repayment obligation is estimated to be 21-22% of State budget revenue (target is below 25%)...
Government-guaranteed debt continues to be tightly managed, decreasing from 3.8% of GDP in 2021 to about 2-3% of GDP in 2024. |
Along with that, the Government debt structure by the end of 2024 will continue to improve in a positive direction.
Domestic debt is increasing; foreign debt is decreasing, of which the foreign debt portfolio is mainly ODA loans, preferential loans signed with long terms and preferential interest rates.
Domestic debt is estimated to account for about 76% of the Government's outstanding debt, mainly Government bonds, foreign debt is estimated to account for about 24% of the Government's outstanding debt.
Regarding domestic debt, continuing to strengthen the role of long-term investors in the Government bond market and reducing the proportion of Government bonds held by commercial banks.
By June 30, 2024, the holding ratio of Government bonds by insurance companies, Vietnam Social Security, investment funds, and financial companies will reach about 62.5% of total outstanding debt, the rest will be commercial banks, securities companies, investment funds, and other investors.
Meanwhile, for foreign debt, the main creditors are bilateral and multilateral development partners such as Japan, Korea, the World Bank, and the Asian Development Bank.
In 2024, the average issuance term of the debt portfolio will continue to be relatively long. By September 5, 2024, Government bonds issued will have a term of 5-30 years and an average issuance term of about 11.05 years, ensuring the target of 9-11 years set by the National Assembly, contributing to minimizing the risk of debt restructuring.
At the same time, the average issuance interest rate as of September 5, 2024 is about 2.48%/year, flexibly managed, in accordance with developments in the domestic financial and monetary market and in harmony with monetary policy.
Problems related to public investment and bidding have not been thoroughly resolved
In addition to positive results, the Government has also identified a number of shortcomings in public debt management.
Accordingly, the progress of negotiations and signing of foreign loan agreements by the Government is slower than expected because many projects have not completed investment procedures or have completed investment procedures but have not been allocated medium-term public investment capital, leading to delays in submitting negotiation policies.
On the other hand, due to differences between domestic regulations and donor regulations (bidding procedures, site clearance) in the context of continued harmonization of domestic laws, the negotiation process and procedures are more complicated and prolonged.
Foreign borrowing costs are currently higher than the average domestic borrowing costs and pose risks related to exchange rate fluctuations between foreign currencies/local currencies, market conditions and the ability to manage risks of foreign currency loans.
Vietnam terminated ODA loans with highly preferential loan conditions and switched to loans under market conditions, the loan interest rates of the two largest multilateral organizations during this period fluctuated between 5.91%/year - 6.5%/year.
For bilateral loans, some partners still provide preferential loans with low fixed interest rates, long loan terms, but most have binding conditions (Korea, Japan, Austria, Finland, etc.);
Some other bilateral partners tend to introduce loan conditions that are approaching the market (loans with floating interest rates such as France, Germany).
Disbursement of public investment capital from foreign sources is low, estimated disbursement of public investment capital in the first 9 months of the country reached 47.29% of the plan assigned by the Prime Minister, of which disbursement of foreign capital reached 24.33% of the plan assigned by the Prime Minister.
The shortcomings and limitations in mobilizing and managing the use of loan capital are due to both objective and subjective reasons.
The objective reasons include the fact that our country has become a low-middle-income country, gradually approaching the market interest rate; and the international interest rate level remains high.
However, the subjective reasons are still the key ones. In the context of our country's legal system being completed, problems related to public investment and bidding have not been resolved while ensuring strict compliance with domestic laws for loan agreements, international loan treaties, along with pressure from donors to widely apply international standards.
To resolve the shortcomings and inadequacies, the Government proposed that the National Assembly add three draft laws to the agenda of this 8th Session, including the draft Law on Public Investment (amended); the draft of 1 law amending 4 laws related to planning, bidding...; and the draft of 1 law amending 7 laws in the financial field.
Related News
Strictly control public debt and ensure national financial security 2025
09:26 | 22/11/2024 Finance
How does the Fed's interest rate cut affect Vietnam?
11:56 | 05/10/2024 Headlines
Inflationary pressure seen from monetary policy
09:47 | 21/07/2024 Finance
Interest rate fluctuations in the world affect Vietnam's exports
10:11 | 01/07/2024 Finance
Latest News
Drastic measures needed to accelerate disbursement of foreign-funded public investment
14:40 | 04/12/2024 Finance
Urging collection of land-related revenues in the last month of the year
13:42 | 04/12/2024 Finance
Innovation and restructuring of state-owned enterprises: Start from institutions
13:40 | 04/12/2024 Finance
Tax policies facilitate business development
13:46 | 03/12/2024 Finance
More News
Tax sector exceeds revenue target 2024
15:48 | 02/12/2024 Finance
Stimulate production and business, submit to the National Assembly to continue reducing 2% VAT
15:47 | 02/12/2024 Finance
M&A in Vietnam expected to be bustling in 2025
17:54 | 01/12/2024 Finance
Major reforms in the management of state capital in enterprises
09:18 | 01/12/2024 Finance
Vietnam makes comprehensive strides in public financial management reform
09:16 | 01/12/2024 Finance
Central bank increases credit growth limit for banks for second time this year
15:11 | 30/11/2024 Finance
Decree on the implementation of global minimum tax: Ensuring a clear and transparent legal framework
11:06 | 30/11/2024 Finance
Agree to continue reducing VAT by 2%
11:02 | 29/11/2024 Finance
Four challenges that put pressure on monetary policy management
13:48 | 28/11/2024 Finance
Your care
Drastic measures needed to accelerate disbursement of foreign-funded public investment
14:40 | 04/12/2024 Finance
Urging collection of land-related revenues in the last month of the year
13:42 | 04/12/2024 Finance
Innovation and restructuring of state-owned enterprises: Start from institutions
13:40 | 04/12/2024 Finance
Tax policies facilitate business development
13:46 | 03/12/2024 Finance
Tax sector exceeds revenue target 2024
15:48 | 02/12/2024 Finance