Huge funds raised from bonds lie idle in Vietnam

By VnExpress   December 12, 2016 | 08:06 pm PT
Huge funds raised from bonds lie idle in Vietnam
A man monitors a stock index display board in Ho Chi Minh City. Photo by Reuters
The country is sitting on cash piles after a strong year for debt sales.

After a sucessful year of bond sales, Vietnam now has a large fund waiting to be spent on public projects.

The government has so far raised VND280.79 trillion ($12.3 billion) via bond sales, a 45 percent jump from a year ago, official data showed. The year has seen the strongest demand ever from local investors.

The State Treasury, which holds weekly bond auctions at the Hanoi Stock Exchange, has offered more long-term bonds and cut the trading volume of short-term bonds so that the proportion of bonds with tenures of five years or more will increase to 46 percent of the gross debt.

According to the Finance Ministry, the government has this year offered Vietnamese dong-denominated bonds with the average maturity of 5.61 years, paying an average yield of 8.72 percent per year.

However, the efforts to turn to the local debt market may be all for nothing.

The Vietnamese government has managed to disburse only 46.6 percent of the targeted spending from bond proceeds, said the Finance Ministry. That was down from 62.3 percent in the same period last year.

Low disbursement of public funding could further drag down the economic growth.

The country’s annual growth forecast has been lowered to between 6.2 and 6.5 percent from 6.7 percent earlier.

Still, the country is aiming for 6.7 percent GDP growth in 2017 while capping inflation at 4 percent.

Vietnam ran a budget deficit of VND167.25 trillion as of the end of November, which was relatively close to the ceiling of 65.8 percent of gross domestic product set by the National Assembly earlier this year.

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