A report from the Ministry of Finance reveals that Vietnam’s foreign debt increased by an average of 16.7 per cent annually in the 2011-2017 period.

The country’s foreign debt, however, fell to 46 per cent of GDP as at the end of 2018, from 48.9 per cent a year earlier.

Of this, the government’s foreign debt, government-guaranteed debt, and the debts of domestic businesses were 19.3 per cent, 4.4 per cent, and 22.3 per cent, respectively.

The ratio of debt repayments to total trade turnover was about 25 per cent, meeting international regulations and practices.

Addressing a meeting with leaders of certain ministries and sectors and the National Financial Supervisory Commission in Hanoi on August 9, Deputy Prime Minister Vuong Dinh Hue confirmed that the government’s foreign debt has been declining sharply and is under the government’s control.

The government, he added, set a loan guarantee limit of $700 million in 2018 but did not guarantee any international loans for projects and prioritized domestic loans because they had lower interest rates.

With such outcomes, Mr. Hue confirmed that the country’s foreign debt is still below the ceiling of 50 per cent set by the National Assembly (NA) and is under the government’s control.

He noted that up to 48.4 per cent of the country’s foreign debt in 2018 came from loans of businesses and financial and credit institutions, compared to 25.6 per cent in 2011 and 40.4 per cent in 2016.

The rapid increase in foreign debt in the form of self-repayment was mainly seen in the foreign-invested sector, which accounted for 76 per cent of the total debts of enterprises, he said.

He asked ministries and related sectors to strengthen the management of foreign debt according to legal regulations, including the Law on Public Debt Management and resolutions from the NA and the government on public debt, to ensure capital demand in the economy in general as well as the rights and obligations of enterprises.

He assigned the Ministry of Finance and the State Bank of Vietnam to coordinate with relevant ministries to improve the law on self-repayment debt management of enterprises and focus on supervising the total debt and debt structure as well as to take into account risks for each business, in accordance with international practices.

The Ministry of Planning and Investment has been tasked with reviewing and evaluating overall foreign investment, especially large-scale projects, and the impacts of foreign loan conditions on FDI growth and attraction.

According to the Ministry of Finance, in the first half of this year, total corporate bond issuances exceeded VND116 trillion ($4.98 billion), a year-on-year increase of 7.4 per cent. Of which, VND36.7 trillion ($1.58 billion) were issued by commercial banks (36 per cent of the total) and real estate firms VND22.12 trillion ($953 million), or 19 per cent. The remainder were issued by listed companies (3.5 per cent) and other businesses.

As at June, capitalization in the corporate bond market was equivalent to 10.22 per cent of GDP, surpassing the set target of 7 per cent by 2020.