Vietnam's public debt remains well below 60% of GDP

THE HANOI TIMES — Vietnam's public debt reached 34.7% of GDP by the end of 2024, well below the 60% ceiling set by the National Assembly.

This figure is 1.3-2.3 percentage points lower than the government's October 2024 forecast, Finance Minister Nguyen Van Thang reported at the meeting on April 24 of the National Assembly's Standing Committee on the Government's Report on Economy and Waste Prevention.

The public debt reached 32.2% of GDP, and the public external debt stood at 31.8%. The government's direct debt service obligation is equivalent to 20.8% of total budget revenues. All these figures remain within the limits set by the National Assembly for the period 2021-2025.

According to the 2024 public borrowing and debt repayment plan approved by the prime minister, the government would borrow up to $26.2 billion, with almost 98% of this to finance the central budget. The bulk of this borrowing, $20.9 billion, will be raised domestically through the issuance of government bonds. Concessional and ODA loans from foreign sources are expected to contribute about $981 million.

In terms of the performance of the 2024 budget, Minister Thang noted that revenues exceeded $77.5 billion, an increase of 20% over the approved estimate.

Expenditures reached about $70.9 billion, or 86.4% of the estimate. About $7.6 billion was used to finance tax and fee exemptions, reductions and deferrals, half of which were direct tax cuts. Thang emphasized that the budget expenditure was managed proactively, with efforts to curb regular spending and cut non-essential expenditures. Over $2.5 billion was saved by agencies and local governments in 2023.

In the oversight report, Le Quang Manh, Permanent Vice Chairman of the Economic and Financial Committee, flagged rising tax arrears compared to 2023 and slow disbursement of public investment, which remains unresolved. "Large carryover expenditures lead to waste and reduce the efficiency of capital use," Manh said, urging the government to tighten fiscal discipline and better control the budget deficit.

The government is targeting economic growth of over 8% this year, setting the stage for double-digit growth in the coming years. Public debt is projected at 36-37% of GDP in 2025, government debt at 34%-35%, and external debt at 33%-34%. The government's direct debt service ratio is projected to be around 24% of total budget revenues.

To achieve these goals, Minister Thang said the government will strictly manage the borrowing, use and monitoring of debt to cover the budget deficit and repay principal. The issuance of government bonds will continue to be aligned with actual development investment and debt repayment needs, with careful monitoring to ensure efficiency and fiscal prudence.

The National Assembly is expected to review the Economy and Waste Prevention Report during its session in May.