Vietnamese Prime Minister Nguyen Xuan Phuc
has approved a plan under which the government will borrow 452 trillion dong ($20.1 billion) this year to offset its budget deficit and roll over existing debts.
The amount represents an increase of 55.4% compared with the government’s borrowing plan for 2013.
Of the total, the government will use 254 trillion dong ($11.3 billion), or 56.2%, to cover the nation’s fiscal deficit, and 60 trillion dong ($2.67 billion) for investment projects.
In addition, it will earmark 95 trillion dong ($4.22 billion) to refinance existing debts and 43 trillion dong ($1.91 billion) to on-lend to local governments and enterprises.
The government plans to raise 336 trillion dong (nearly $15 billion), or 74.33% of the total, from selling government-bonds, taking loans from the Social Security Fund and its investment arm State Capital Investment Corporation (SCIC).
Official development assistance (ODA) loans are expected at 99 trillion dong ($4.7 billion). Besides, the government plans to raise 17 trillion dong ($755.6 million) from issuing sovereign bonds in foreign currencies at home or abroad.
Meanwhile, the government plans to spend 273.3 trillion dong ($12.15 billion) on debt servicing this year.
In addition, the government will provide guarantees of 39 trillion dong ($1.73 billion) at most to loans to be taken out by the Vietnam Development Bank (VDB) and Vietnam Bank of Social Policies (VBSP).
Sources: Vietnamese government.
The Vietnamese government is facing a dilemma of boosting economic growth while striving to keep public debt below the ceiling.
The country’s public debt increased to 62.2% of GDP
at the end of this year. The ratio is projected to climb to 63.8% at the end of this year and 64.7% in 2018, according to the World Bank
However, HSBC in a report released earlier this month said that Vietnam’s debt-to-GDP ratio is expected to rise to 64.5% in 2016 and could breach the National Assembly-approved limit of 65% in 2017.