Author Topic: ​Conference paints dark picture of Vietnam’s public debt  (Read 791 times)

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Offline UniFy(心臓盗人)

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A conference in Hanoi on Wednesday drew a bleak picture of Vietnam’s national debt, with experts urging that action be taken to stop the ‘mountain of government debt’ from piling up.

Vietnam’s public debt has been plagued by an average annual increase of 18.4 over the last five years, a pace three times faster than its economic growth, according to Dr. Vu Si Cuong from the Academy of Finance.

In 2016, government debt was estimated at around 64.3 percent of GDP, just shy of the 65 percent ceiling capped by the legislature.

Cuong elaborated that Vietnam mostly borrows from the World Bank, the Asian Development Bank, and the Japanese government.

As of the end of 2015, Vietnam’s debt to the World Bank had topped VND274.2 trillion (US$12.08 billion), an 11-fold climb from 2001.

Similarly, debt to the ADB surged to VND151 trillion ($6.65 billion) in 2015 from only VND7.5 trillion ($330.4 million) in 2001.

Loans from Japan, the country’s third-largest creditor, totaled VND35.9 trillion ($1.58 billion) in 2001 before skyrocketing to VND243.9 trillion ($10.74 billion) by the end of 2015.

As far as the public debt to GDP ratio is concerned, Vietnam’s national debt is one of the highest in the world, according to the International Monetary Fund.

High risks

The massive debt comes with high risks, including the need for the country to earmark an increasing proportion of its state revenue for debt repayment, Cuong underlined.

This has forced the government to adapt a ‘rollover’ technique of taking out new loans to repay old debts. The practice indicates that the government does not have enough resources to repay its original debts, Cuong said.

The expert added that countries with a high level of public debt are normally rich nations, but “it is a surprise that this happens to middle-income Vietnam.”

“Our population is aging steadily, accompanied by low average productivity, so Vietnam could become a country that is ‘not yet rich but already old’ and also carries an enormous debt,” Cuong said.

“Many countries with similar growth to Vietnam’s do not have such a high level of public debt.”

Dr. Le Dang Doanh, former head of the Central Institute for Economic Management, said tightening management on public spending is the only solution for Vietnam to rid itself of the ‘mountain of public debt.’

Vietnam’s government deficit has continued to build up over the last few years so the government is forced to borrow more in order to invest in development, according to Doanh.

“Vietnam has to earmark 71 percent of its state revenue for regular spending, and 24.5 percent for debt repayment, so there is not much left for investment and development spending,” he elaborated.

“At some point, we’ll need to borrow debt for both development and regular spending, which is worrying.”

Doanh advised that Vietnam consider international practices and create a policy on public spending management to resolve the problem.

He added that debts borrowed by state-run enterprises should also be counted as public debt, as “either way, the government will have to use the money from the state budget to repay when state companies default on loans.”

Cuong, from the Academy of Finance, said Vietnam would breach its ceiling on public debt if these state-run enterprises’ debts are counted as suggested by Dr. Doanh.

With corruption out of control and many projects facing delays all the time because of that, no wonder the commie debt are growing beyond their control. 

Offline Lavender

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #1 on: October 19, 2017, 10:12:19 AM »
Corruption is one thing. The other thing is to develop high tech economy instead of selling massive amount of raw materials for pennies.

Offline Qu Đơn

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #2 on: October 19, 2017, 11:21:29 AM »
Vietnam should open magic schools since even without magic schools´ certification the top officials manage to make huge sums of money earmarked for public spending disappear into thin air like seasoned masters of the art. 

Offline gaden

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #3 on: October 19, 2017, 12:56:55 PM »
I din't think banks should give VN any credit.  Vietnamese have not have experience with credit.  They'll run away and the whole economy will collapse.

I don't think Vietnam have credit cards.  They ussually purchase things outright with cash.

Offline Lavender

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #4 on: October 19, 2017, 02:48:13 PM »
that's right. you an borrow money for a house since the house is collateral but the interest is really high.

Offline ngjm95

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #5 on: October 24, 2017, 01:51:00 AM »
65% to GDP is not too bad.

Canada — 91.5%. While Canada is behind the US in the overall competitive country ranking by WEF, it has a lower debt to GDP ratio while the US "lags behind Canada in the quality of institutions, macroeconomic environment, and health and primary education."

16. Ireland – 95.2%. The country has reduced its GDP to debt ratio from 122.8% last year, as it continues its success in refinancing a large amount of banking-related debt.

15. France – 96.8%. France's government debt to GDP ratio has widened this year as it struggles with weak productivity and wages.

14. Singapore -98.2%. The country is one of the richest in the world and it has managed to reduce its GDP to debt ratio from 103.8% last year. Meanwhile, the government is now trying to find new ways to grow the economy and raise productivity.

13. Spain — 99%. Spain, like many eurozone countries, is trying to raise productivity across the country to boost its economy.

11. United States _ 105.8%. It will be all change over the next few months when US President Barack Obama leaves office and either Hillary Clinton or Donald Trump takes over. The Federal Reserve is also tipped to be on the cusp of raising interest rates soon.

10. Belgium — 106.3%. The country is home some of the most powerful people in the world, thanks to Brussels, but the nation suffers from high government debt levels as it battles with restrictive labour and tax
regulations, says WE

5. Portugal — 128.8%. Portugal exited its own bailout programme in the middle of 2014, and it is still trying to economically recurperate.

4. Italy — 132.6%. The country's proportion of debt to GDP is the second highest in the Eurozone. Italy is also at one of its most crucial crossroads in recent history as the nation goes to vote on constitutional
reforms soon

2. Greece — 178.4%. The country is continuing to suffer since the sovereign debt crisis of 2010. It is still struggling to make debt repayments after being bailed out continually by international creditors and is still in full force of a stringent austerity drive.

1. Japan — 248.1%. The country's debt to GDP ratio is enormous. The country is in a troubling spot. Its economy is growing very slowly and now the central bank has implemented negative interest rates.

The strength of an economy depends on more criterias than the size of public debt.
65% is defined by IMF  as a criteria for eligibility of low interest loans  since there is less risk for default.

Offline ngjm95

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #6 on: November 01, 2017, 02:25:14 AM »
Another good news for Vietnam banking from Moody's

Moody’s Investors Service on Tuesday upgraded its outlook for Viet Nam’s banking system to positive for the next 12-18 months from stable, reflecting the country’s strong economic prospects and the positive outlook for most rated banks.
"The change in outlook - which expresses our expectation of how bank creditworthiness will evolve in this system over the next 12-18 months - reflects Viet Nam’s robust economic growth, supported by domestic demand, healthy exports and public sector investment," Eugene Tarzimanov, Moody’s vice president and senior credit officer, said

Wednesday, Nov 01, 2017

Offline ngjm95

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #7 on: January 09, 2018, 03:37:05 AM »
Vietnam’s public debt stands at 61.3% in 2017: Finance Ministry

Vietnam’s ratio of public debt to GDP stood at 61.3% at the end of 2017, lower than an earlier estimate of 62.6%, according to the Ministry of Finance.

Offline Lavender

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #8 on: January 09, 2018, 03:58:15 PM »
for a developing country that can't back its debts, VN really need to keep it low.

developed countries have unsustainable debts due to lefty policies. they need to scale back too.

Offline ngjm95

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #9 on: January 10, 2018, 08:31:14 AM »
So far Vietnam was able to pay back. So World Bank can  claim Vietnam is  a good example of relations between lenders and borrowers.
Vietnam sets an example on how WB can offer loans to Third World countries.
When starvation was threatening, Vietnam rejected IMF loans . Then WB and Vietnam got  together to elaborate how to restart the economy
Vietnam so far has rejected loans from non institutional lenders.WB offers to VN low rate because she can  trust.
Trust and economy growth   influence credit rating

Offline ngjm95

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Re: ​Conference paints dark picture of Vietnam’s public debt
« Reply #10 on: January 10, 2018, 10:05:37 PM »
Lastest news:Vietnam declines $1.2 billion high-interest foreign loans

The Ministry of Finance last year turned down eight foreign loan programmes and projects worth a staggering $1.2 billion given their high interest rates, heard a conference in Hanoi City on January 3.

Hoang Hai, deputy head of the Department of Debt Management and External Finance under the finance ministry, said that since July 2017 Vietnam has not got aid from the International Development Association, which provides concessional loans and grants for developing countries.

Therefore, Vietnam has come under enormous pressure to seek loans at low interest rates from foreign donors.

Meanwhile, the government has no way but to continue borrowing loans in order to finance large-scale public projects. Many investors have accepted high rates to meet their capital demand.

Therefore, the Department of Debt Management and External Finance is striving to seek preferential loans. However, it always rejects loans with high rates. Notably, the department rejected loans totalling $1.2 billion last year because of high interest rates.

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