Vietnam’s public debt will rise to 64.9 percent of the gross domestic product (GDP) in 2016, but will drop since to 60.2 percent in 2020, Prime Minister Nguyen Tan Dung says.
The projected peak is just a hair under the maximum debt ratio that the government has deemed economically safe.
Nearly all of that money the country borrowed was directed toward development projects, Dung said while speaking at a monthly government meeting on Wednesday.
Vietnam's debt-to-GDP ratio is expected to hit 60.3 percent this year, up from 54.2 percent in 2013, he added.
In an effort to ease the debt, the government has approved a plan to issue US$1 billion in new sovereign bonds to swap for debt issued in 2005 and 2010, allowing the nation to cut interest payments.
The yield of $1 billion of existing international bonds --maturing at 6.95 percent a year -- is high and the government now has a chance to issue bonds at lower interest rates, Nguyen Van Nen, Minister and Chairman of the Government Office said in August, without providing further details.
At the meeting held Wednesday, PM Dung also ordered the central bank to use proper measures to slash the bad debt ratio to below 3 percent in 2015 from the current rate of 5.43 percent.
Nguyen Thi Hong, deputy governor of the State Bank of Vietnam, said the banking system's bad debts had hit VND252 trillion ($11.9 billion), or 5.43 percent of total outstanding loans, by October.
When asked why his figures exceeded the rates reported by commercial banks (3.8 percent) Hong said banks hadn't fully assessed their borrowers' ability to pay back their loans.