Vietnam's external debt climbs to $29 bln

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Vietnam took foreign loans totaling US$1 billion last year, bringing the country's total foreign debt to $29 billion, the Ministry of Finance has reported.

The level of debt is safe and Vietnam is still able to make annual repayments, said Nguyen Thanh Do, head of the ministry's external financing and debt administration department.

He said the level of debt was also also reasonable considering the country's development's demands.

Since 1993 Vietnam has always managed to pay off debts and interest by the deadline every year, he added.

According to the department's report, without taking more loans, Vietnam will have to pay over $1.7 billion in debt repayment and over $250 million in interest payments in 2016.

This year it is supposed to pay a total of $1.1 billion, in both principal and interest payments, the department said.

Do said they will strictly control all the loans taken as many groups are making plans to issue international bonds to mobilize capital next year, threatening to increase Vietnam's debts.

Doan Hong Quang, a high-ranking expert with the World Bank in Vietnam, said most of Vietnam's loans were taken from Japan, mainly in yen, which is subject to increases in value.

If the Japanese currency rises together with US dollar, Vietnam will face a double-increase in currency value when buying US dollars to buy yen and repay its debts, Quang said.

He suggested Vietnam should consider building its creditworthiness as well as the currency to use when taking loans to avoid exchange rate risks.

In fact, the external financing and debt administration department's report showed that Vietnam currently owes Japan $8.1 billion, which is the highest, followed by France, Russia and China.

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