Vietnam's public debt obligations are rising and could threaten the nation's financial security unless they are closely managed, said Prime Minister Nguyen Tan Dung.
When growth began to flag, Vietnam actively increased borrowing from both local and overseas lenders to fund development, he explained to the National Assembly (NA) on Wednesday.
And the borrowing is only set to increase.
According to the PM, Vietnam plans to issue VND335 trillion ($15.95 billion) worth of government bonds between 2011 and 2015, 2.5 times as many as it issued in the 5 preceding years.
Put another way, the country has issued VND250 trillion worth of bonds since 2011 and is expected to issue additional VND85 trillion next year.
The government has also accelerated disbursement of official development assistance (ODA) and extended preferential loans to priority firms and regional governments engaged in essential infrastructure and socioeconomic projects, he said.
During that process, the country's public debt leapt from 51.7 percent of its GDP in 2010 to 60.3 percent in late 2014.
That figure is expected to climb to 64 percent in late 2015.
Still, Dung added, Vietnam's debt remains below the 65 percent safety cap approved by the NA and the country has met all of its debt obligations on time.
It has also laid out plans to ensure on-time payments in the near future, he said.
An estimated 14.2 percent of the nation's 2014 budget was set aside for repaying loans taken out by the central government, well below the regulatory ceiling of 25 percent, he said.
Due to the upward trajectory of the country's macroeconomic situation, Vietnam has used some of its new long-term, low-interest loans to repay old ones providing some much-needed relief to the country's debt obligations, he said.
The PM also acknowledged that Vietnam's public debts are approaching the country's safety ceiling, thereby increasing pressure in the short term.
And everything isn't rosy, he noted.
Several large investment projects have proven ineffective, while corruption, wastefulness, and budgetary excesses have also chipped away at the country's finances.
“The situation has raised concerns at every level of our society. Public debt will threaten our national financial and macroeconomic stability, unless they are strictly monitored,” he stressed.
In the end, Dung promised that Vietnam's borrowed money would be set aside solely to cover the costs of essential infrastructure and socioeconomic projects that are critical to the country’s development plans.
The prime minister said the task of resolving bad debt will require time due to an incomplete legal framework, a lack of state budget and experience.
In Late September, the State Bank of Vietnam announced that bad loans represented 5.4 percent of outstanding funds at commercial banks.
The bank said that the ratio was expected to fall to 3.7-4.2 percent later this year, compared to 17 percent in September, 2012.
The Vietnam Asset Management Company (VAMC), which the central bank formed to deal with bad loans, has resolved 4 trillion dong ($187.97 million) worth of bad debt, or 4 percent of the VND95 trillion it bought from banks, Dung said.
The government aims to cut bad debts to around 3 percent by the end of 2015.
HIGH UNEMPLOYMENT: LABOR MINISTER
During Wednesday's NA Session, Minister of Labor, Invalids and Social Affairs Pham Thi Hai Chuyen fielded questions from delegates on rising unemployment, an ineffectual minimum wage and a struggling social insurance fund.
During the open session, Delegate Truong Minh Hoang asked the minister why tens of thousands of Vietnam's university graduates can't find employment.
The minister admited that Vietnam's higher education system hasn't properly equipped its graduates with the skills that private companies are looking for.
She also cited a sagging economy, which has forced hundreds of thousands of firms to shut down, as another reason for the situation.
Regarding the nation's salaries, Minister Chuyen said the country's minimum wage only covers 60 percent of the average Vietnamese person's basic cost of living.
Chuyen noted that the government has set aside VND11 trillion for an upcoming salary bump--but even that won't amount to a living wage.
Prime Minister Nguyen Tan Dung recently approved a measure that will raise Vietnam’s minimum monthly salary by between VND250,000 and VND400,000 (US$12-$19) starting next year.
Under a government decree that will go into effect on January 1, 2015, Vietnam will raise the minimum salary to between VND2.15 million and VND3.1 million ($101.4-$146.2), depending on the location of the worker.
Vietnam's economy, which recorded growth of 5.42 percent last year, is expected to expand 5.8 percent in 2014, in line with the government's projected target.