Despite high public debt, Vietnam continues to borrow millions for development needs Vietnam has borrowed $4-5 billion a year in the last 10 years, and the public debt has nearly hit the ceiling. However, the country will continue borrowing because it needs capital for development and investment, according to the Ministry of Finance (MOF). In 2014, the money borrowed for development and investment reached VND627.8 trillion, equal to 60.3 percent of GDP. This was the year when the public debt increased most sharply in the 2011-2020 period as predicted by MOF. In 2015, the public debt is predicted to increase to 64 percent of GDP, while it will hit the ceiling by 2016 when it reaches 64.9 percent of GDP. After that, the public debt will decrease gradually to 60.2 percent of GDP by 2020. As such, Vietnam has failed to implement a national public debt strategy. The debt at 65 percent of GDP was projected for 2020, but in fact, it is obvious that the debt would reach the threshold five years sooner. A research team of the Ministry of Planning and Investment warned that if counting on the five liability items and provisioning, the actual public debt would be 7-8 percent higher than the officially reported figure. Meanwhile, analysts said the debts incurred by state-owned enterprises, estimated at VND1,100 trillion, also need to be counted on as the public debt, because if the enterprises cannot pay debts, the state will have to come forward and pay debts for them. However, MOF believes that it will be unfair to count the state-owned enterprises’ debts on the public debt. Economists have repeatedly warned against the rapid increase in the public debts. However, Truong Hung Long, director of the MOF’s External Finance Department, said that Vietnam has been fulfilling its debt-payment obligations well with all due debts paid on schedule. Also, according to Long, the sum of money used to pay debts accounts for less than 25 percent of the yearly state budget revenue. The ratio was 13.8 percent in 2014 and it is estimated at 16.1 percent this year. However, the research team pointed out that the ratio have exceeded the 25 percent safety line, if counting the government’s borrowed money for re-lending to enterprises. The figures would be 25.92 percent in 2014 and 31.75 percent in 2015. The ratios would be even higher if calculating total debt payment obligations on state budget revenue – 33.39 percent in 2013, 38.07 percent in 2014, while it would be 45.02 percent in 2015. Sanjay Kalra, the IMF (International Monetary Fund) permanent representative in Vietnam, while noting that Vietnam’s public debt is at a high level, said Vietnam should restrict borrowing in foreign currencies to reduce sovereign debt. Pham Huyen, VNN