Vietnam's foreign debt hits $32.5 bln in 2010

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Foreign unpaid debt held and guaranteed by the Vietnamese government reached US$32.5 billion by the end of 2010, up $4.6 billion year-on-year, according to a recent report from the Ministry of Finance.


Some $27.86 billion of those loans are owed by the government, the report said.


The foreign debt accounts for 42.2 percent of Vietnam's GDP in 2010, up from 39 percent in 2009. The figure is the highest foreign debt ratio since 2006, according to statistics from the ministry.


It is also much higher than the 38.8 percent rate predicted by the government in late 2010.


A total of $1.67 billion from the state budget was spent last year to pay some of the loans, plus the interest, the report said.


The ministry also warned that Vietnam's foreign reserves in 2010 equaled 187 percent of short-term loans, compared to 290 percent in 2009, and 2,808 percent in 2008.


According to the report, foreign lenders have gradually raised interest rates, probably because Vietnam has officially become a middle-income country, and also because it has lost creditworthiness after several macroeconomic problems including the Vinashin scandal.


The state-owned shipbuilder has been driven to the edge of bankruptcy with debts totaling VND86 trillion ($4.4 billion) by June 2010.


Vietnam is borrowing more than half of the loans at annual interest rates of 1-2.99 percent. Yet loans of 6-10 percent rates had already reached $1.89 billion in 2010, double the high-rate loan value in 2009.


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