Vietnam to borrow $21 bln next year to cover expenses

By Dat Nguyen   October 21, 2019 | 06:37 am PT
Vietnam to borrow $21 bln next year to cover expenses
An employee counts money at a bank in Hanoi. Photo by VnExpress/Anh Tu.
Vietnam is set to borrow VND495 trillion ($21.54 billion) next year to repay existing debts and cover budget deficits, a government report said Monday.

The country’s expenditure is set to exceed GDP by 3.44 percent next year, or $234.8 trillion ($10.15 billion).

The government expects rising interest rates on foreign loans as the ratio of those with floating interest rates has been increasing, from 8.8 percent of foreign loans in 2015 to 11.4 percent this year. 

This means that the government's repayment amounts will increase.

Vietnam has been depending a lot on official development assistance (ODA) loans with preferential interest rates, but lenders are increasing the rates, increasing the debt burden in return, the report said.

"Over the next five years, ODA loans will gradually decrease and come to an end, leading to a shortage of long-term loans and investment incentives. The government will need to mobilize new loans at much less favorable terms," it added.

Although the ratio of budget expenditure to GDP next year will be the same as this year, the actual spending figure next year is set to increase by VND12.8 trillion ($551.4 million) from this year.

Public debt is set to reach 54.3 percent of GDP by the end of next year, less than the earlier forecast of 56.1 percent.

State budget revenue this year is set to rise by 3.3 percent above initial estimates, the second year in a row that this will happen.

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