Monday, May 5, 2014
Public debt may exceed state revenues by 25% this year
Vietnam's public debt may be 25% more than the country’s total state revenues this year and it may climb to 30% in coming years, said Dr. Tran Dinh Thien, head of the Vietnam Institute of Economics.
Dr. Tran Dinh Thien, head of Vietnam Institute of Economics
Thien announced his projection during a recent two-day economic forum, where he added that bad debt and public debt have formed a "bottleneck" and represent the biggest challenge to the Vietnamese economy.
According to Thien, there is still a lack of reliable risk assessment on bad and public debt, and there is a huge discrepancy between the released numbers and the reality of these debts in Vietnam.
Recently it was revealed that public debt accounted for 55.7% of the country’s GDP, still considered a safe level, while regulations cap it at 65%. This has created a misperception of the national public debt. Thien pointed out that, If the debt of state-owned enterprises, which is not guaranteed by the government, and debt taken on for public construction works were included, the country's total debt would account for 100% of the GDP.
Thien also noted that Vietnam is facing the risk of public debt growing at a faster rate than the GDP. At the same time, the governments ability to repay remains limited.
He cited figures on the rise of public debt in Vietnam in the period between 2010 and 2014. This year, the country will have to pay VND209 trillion (USD9.9 billion) of its debt, which may surpass the country’s total revenues for the year.
Thien suggested that the government speed up revision of the laws on public debt and state-owned enterprises as well as the equitization of private companies.
Dr. Tran Dinh Thien, head of Vietnam Institute of Economics
Thien announced his projection during a recent two-day economic forum, where he added that bad debt and public debt have formed a "bottleneck" and represent the biggest challenge to the Vietnamese economy.
According to Thien, there is still a lack of reliable risk assessment on bad and public debt, and there is a huge discrepancy between the released numbers and the reality of these debts in Vietnam.
Recently it was revealed that public debt accounted for 55.7% of the country’s GDP, still considered a safe level, while regulations cap it at 65%. This has created a misperception of the national public debt. Thien pointed out that, If the debt of state-owned enterprises, which is not guaranteed by the government, and debt taken on for public construction works were included, the country's total debt would account for 100% of the GDP.
Thien also noted that Vietnam is facing the risk of public debt growing at a faster rate than the GDP. At the same time, the governments ability to repay remains limited.
He cited figures on the rise of public debt in Vietnam in the period between 2010 and 2014. This year, the country will have to pay VND209 trillion (USD9.9 billion) of its debt, which may surpass the country’s total revenues for the year.
Thien suggested that the government speed up revision of the laws on public debt and state-owned enterprises as well as the equitization of private companies.
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