Some Considerations About Public Debt of Vietnam

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Shock from the public debt crisis in Greek is spreading to some other EU countries. This makes other countries, especially countries with large public debt and chronic budget deficits, to reassess the situation of their fiscal.

In Vietnam, continuously increasing public debt makes the requirement for higher quality public debt management in Vietnam is becoming urgent.

According to the Ministry of Finance, “public debt”, including government debt, debt that is guaranteed by government debt and debt of local government units. Under this definition, the total outstanding loans to the end of 2009 of Vietnam is estimated at 44.7% of GDP, of which government debt was 35.4%, government-guaranteed debt was 7.9% of GDP and local government debt is 1.4% of GDP.

This concept of public debt of the Ministry of Finance is narrower than the concept of international popularity. Under the debt management system and financial analysis of the UN Conference on Trade and Development (UNCTAD), public debt includes the liabilities of the central bank, the government units (including state enterprises) at all levels of government. Maybe this is cause for data on public debt of Vietnam in the database of some international organizations, higher than the Finance Ministry's figures (see chart).

According to Economic Intelligence Agency (EIU), Vietnam's public debt increased continuously from 36% of GDP in 2001 to 51% of GDP in 2009. According to IMF, although the rate of Vietnam's public debt remains under control but has become more popular than the rate of 30-40% in developing economies and other emerging ones.

Besides, a very worrying trend is also in the period 2001-2009, the government deficit (both within and beyond the estimates) increased from 2.8% of GDP to 9% of GDP. Thus, while public debt increased continuously, the government budget becomes more deficient. This violated a basic principle of sustainable management of public debt, which is today’s public...
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