The proportion of external debt of public debt significantly declined

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The proportion of external debt only is 40%. Photo: Internet

According to the report from the Government, in 2017, the Government did not grant Government guarantees for new projects to borrow foreign capital. The limit of net withdrawal of projects guaranteed by the Government for external loans in 2017 approved by the Government at the beginning of the year was US$ 700 million. However, in 2017, it was estimated to withdraw capital of about VND 25,188 billion (equivalent to US$ 1.127 billion), and to repay original debts of VND 33,063 billion (equivalent to US$ 1.472 billion).

Hence, the net withdrawal of projects guaranteed by the Government for external loans was in a deficit of VND 7,875 billion. Thereby, the debt outstanding at the end of the year was VND 247,169 billion, lower than the beginning of the year, equivalent to 4.9% of GDP (in 2016, Government guaranteed outstanding debt for external loans was 5.7% of GDP). The decrease of guaranteed outstanding debt is due to not granting new guarantees for projects. At the same time, in the recent two years, some enterprises have actively made debt repayment before the deadline to close loans.

One of the successes of the Government in the management over the past time is to extend the Government bonds issuance term and reduce the proportion of external loans.

The Government bonds issuance term was extended: the average in 2011 was 3.9 years; in 2017, 12.74 years, thereby, increasing the average debt term of the Government bonds (in 2011 was 1.84 years; in 2017 was 6.7 years). The mobilization interest rates also fell sharply year by year (on average 12.01% in 2011, 5.98% in 2017; and 4.12% in 5 years in 2016). For the debt structure, the proportion of external loans was reduced from 61% in 2011 to 40% in 2017.

In 2017, the Government also did not grant new guarantees for domestic loans of enterprises. Some projects repaid their original debts before the deadline, such as Son La Hydropower Plant repaid VND 1,724.6 billion, Vinasat repaid VND 669.4 billion, Tam Diep Cement repaid VND 116.8 billion; or did not disburse all the guaranteed capital and only implemented withdrawal of capital for projects which were previously deployed with the value of VND 1,150 billion and repaid VND 4,923 billion of original debts. Thereby, the debt outstanding at the end of the year of projects guaranteed by the Government for domestic loans decreased compared to the end of 2016. As of 31st December 2017, it was estimated that the Government guaranteed debt outstanding for domestic loans was VND 203,534.5 billion, equivalent to 4.1% of GDP.

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Based on the macroeconomic data and the results of capital mobilization and debt repayment of the Government, Government-guaranteed debt and Sub-national government debt, the Government said that public debt indicators in 2017 were within the limits approved by competent authorities. Of which, public debt was 61.4% GDP, Central Government debt was 51.8% of GDP, Government-guaranteed debt was 9% of GDP, Sub-national government debt was 0.6% of GDP, National external debt was 49% of GDP, all these indicators were within the limit approved by the National Assembly.

For public debt structure, the Central Government debt accounted for 84.37%, the Government-guaranteed debt accounted for 14.66% and Sub-national government debt accounted for 0.97%. Regarding the Sub-national government debt, if including loans from the Government’s external loans and from the Vietnam Development Bank, as of the end of 2017, it was estimated that the total Sub-national government’s debt outstanding was VND 66.653 billion, accounting for 1.33% of GDP.

For the National external debt, as per provisions of the Law on public debt management, the National external debt is the total Government’s external debts, the Government guaranteed external debt borrowing and non-guaranteed external debts of enterprises and other organizations under the self-borrowing and self-repayment modality in accordance with provisions of Vietnam Law. As of 31st December 2017, the total National external debt was VND 2,451,978 billion, equivalent to 49% of GDP within the limit approved by the National Assembly (less than 50% of GDP).

However, the National external debt indicator tends to increase compared to 2016 and close to the limit approved by the National Assembly. It is due to the amount of external debt borrowing of enterprises under the self-borrowing and self-repayment modality that it sharply increased. Thereby, the debt growth rate of medium and long-term loans was 22.56%, and short-term loan was 73% compared to 2016.