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Vietnam's government has borrowed $16 billion so far this year, including $11 billion through bond sales which the Ministry of Finance said went quite smoothly.
Compared to the same period last year, government borrowings in January-September almost doubled.
The country has set a target of borrowing about $20 billion this year to meet debt repayment obligations, offset the state budget deficit, raise funds for government spending and bolster an economy dogged by adverse weather conditions and an environmental disaster.
Vietnam's debt servicing costs are estimated at $12 billion this year. As of September 25, payments had reached nearly $7.9 billion, of which 78 percent was allocated to settle debts secured from local bond sales.
In recent years, Vietnam has started to borrow more from local debt markets. As a percentage of the total outstanding government debt, domestic debt rose from 39 percent in 2011 to 57 percent in 2015, said Vo Huu Hien, deputy head of the Department of Debt Management and External Finance.
By shifting towards domestic sources to raise funds, Vietnam is relying less on foreign creditors, cutting the ratio of foreign loans significantly from 61 percent in 2011 to 43 percent in 2015.
Official figures show the budget deficit stood at 4.4 percent of GDP in 2011, 5.36 percent in 2012, 6.6 percent in 2013, 5.69 percent in 2014 and 6.1 percent last year.
The National Assembly, Vietnam's legislature, has tried to place a cap on the budget deficit in recent years, but state budget expenditure has remained higher than targeted.
Vietnam ran an estimated deficit of VND152 trillion ($6.8 billion) in the January-September period this year, said the General Statistics Office.
The World Bank forecasts that Vietnam’s public debt will climb to 63.8 percent of the country’s GDP in 2016, 64.4 percent in 2017 and 64.7 percent in 2018.
Slumping crude oil prices have cut budget revenues considerably. Government statistics show that crude-related revenue, which made up 30 percent of the nation’s budget in 2005, fell to 20 percent in 2010 and accounted for about 10 percent in 2015.
The country posted a sharp decline in Jan-Sept revenue from crude oil to an estimated VND29.8 trillion, 42 percent down from the same period last year.
The budget deficit is expected to widen further as the country lowers taxes to support businesses in the private sector.
The finance minister said that budget revenue from taxes and levies, excluding income from crude oil exports and taxes on land use, account for only 15.6 percent of gross domestic product (GDP), which is considered low compared to Thailand’s 23 percent, Laos’ 23.4 percent and Malaysia’s 24.5 percent.
Last year’s public debt, which in Vietnam also includes loans guaranteed by the government, stood at 62.2 percent of GDP, which was relatively close to the ceiling of 65 percent set by the National Assembly.
Vietnam's government set an economic growth target of 6.7 percent for this year, following 6.68 percent growth in 2015.
However, adverse weather conditions and mass fish deaths along the central coast have forced the government to revise down the 2016 target to between 6.2 percent and 6.5 percent.
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