Vietnam government allays fears about public debt

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The government has borrowed over US$32.93 billion in the past three years, it revealed in a report it released amid public demand for details about the country's public debt.

The National Assembly's Economic Committee recently warned that Vietnam faces a high risk of a debt crisis.

Bond issues, all domestic, accounted for nearly 42 percent of the total debt during the period.

More than half the money was used to fund expenditure during a period when the budget deficit was 2.7 percent of the gross domestic product.

Vietnam's public debt last year stood at $76.18 billion, or 55.4 percent of then GDP.

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The country's largest foreign creditor is Japan, which accounts for 17 percent of total loans, followed by the World Bank with 13 percent. 

The government has allayed rising concern about the debts, saying it is still below the threshold of 65 percent of GDP it has set.

The central government accounts for 78 percent of the debt and local governments for 1 percent. Central government-guaranteed loans make up the rest.

This dovetailed with the country's strategy of controlling public debt through 2020, the government has said.

Most of the overseas debt is from soft loans with a 25-30-year tenor and a grace period of 5-10 years, and carrying interest rates of 1-1.5 percent, it said.

But the Economic Committee has said borrowings by state-owned firms are not treated as public debt though when the companies are in trouble the government has to bale them out.

If these loans are indeed included, the debt figure would be as high as 95 percent of GDP, it estimated.

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