Vietnam's government is currently under some distress because public debt is "rapidly" increasing, approaching the limit set at 65 percent of gross domestic product, the Ministry of Finance said Thursday.
The pressure was because the government's debt structure was "not really sustainable" -- using short-term loans to fund long-term projects, Truong Hung Long, chief of the ministry's Department of Debt Management, said.
Around 16.1 percent of state revenues will be spent on debt payments this year, which is below the limit of 25 percent approved by the National Assembly, the department reported.
The ratio was 13.8 percent last year and 15.2 percent in 2013.
A recent report by the assembly's finance committee showed that the government was supposed to spend up to 31 percent of its revenue paying public debt this year, news website Saigon Times reported.
Asked about the difference, Nguyen Minh Tan, deputy chief of the ministry's Department of State Budget, told the website that the higher estimate also covered loans on-lent to a third party.
The ministry late last year reported that Vietnam’s public debt was over $84 billion, about 60.3 percent of GDP.
In the meantime, Long said: "Since the country's resources are still limited, it is necessary to borrow money for investment.
"A huge public debt is therefore inevitable."
At the meeting on Thursday, Long also dismissed claims that Vietnam's public debt position will be affected by the state bank's recent devaluation of the dong by 1 percent against the US dollar.
He said 46 percent of the government debt was external and had a diversified currency composition, with only half of the foreign debt in US dollars.
Even though the rate adjustment can affect US dollar borrowings, the effect can be offset by loans in other currencies, Long said.
At a meeting early this year, Nguyen Quoc Anh, a senior official from the Ministry of Investment and Planning said that with the exchange rate's hike, Vietnam's external debt will increase by about VND10 trillion ($458.8 million).
He said 80 percent of Vietnam's external debt is in US dollars, much higher than the figure reported by the finance ministry.
In March, the central bank announced that it aimed to keep the dong depreciation at less than 2 percent for the whole of 2015.