Vietnam's debt is at a "comfortable level,' IMF says

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Vietnam's debt level isn't a source of concern provided the Southeast Asian nation maintains a "healthy" rate of growth and reduces its budget deficit, the International Monetary Fund said.

The government may lower its deficit to about 6.2 percent of gross domestic product in 2010 from about 9 percent last year, Citigroup Inc. said this month in a research note that called steps by Vietnam to tighten its fiscal stance "encouraging."

"The debt outlook for Vietnam looks OK," Benedict Bingham, the senior resident representative in Hanoi for the IMF, said today at a conference in the Vietnamese capital. "The debt level will continue to be at a comfortable level if Vietnam is able to maintain growth and a prudent fiscal policy."

Bingham said Vietnam has the capacity to develop rapidly over an "extended period of time" and the IMF has a "bullish" view of the nation's economic potential.

Vietnam has recorded average annual growth exceeding 7 percent in the past decade, pushing its per-capita income past $1,000. The government said this week it expects the pace of expansion to reach as much as 8.5 percent by 2015.

The country must find a way to raise sufficient funds to improve the infrastructure and improve the education system, Bingham said. Vietnam's economy is growing too fast for its current level of infrastructure, Nomura Holdings Inc. said in December.

"Vietnam needs to figure out how to meet these financing needs," Bingham said. "Among other things, sales of shares in state-owned companies may need to play a greater role, which may require a broader reassessment of the balance between state investments in industrial assets relative to investments in public infrastructure and in education and health."

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