Recalculation shows Vietnam’s public debt at 66.4% of GDP The Ministry of Planning and Investment (MPI), after a recalculation, has announced that Vietnam’s public debt in 2014 was equal to 66.4 percent of GDP, or 6.5 percent higher than the 59.9 percent rate made public before.    In recent reports to the National Assembly’s sessions, the government repeatedly affirmed that the public debt is still under the safety ceiling. Under the 2009 Public Debt Management, public debt is referred to government debt, government-guaranteed debt and local authorities’ debt. As such, the calculation of public debt is different from that determined by the International Monetary Fund (IMF) and the World Bank (WB). It does not include three kinds of debt – State Bank debt, State-owned enterprise (SOE) debt and social security organizations’ debt. A report by MPI showed that the Public Debt Management Law excludes some kinds of debt which should be counted as public debt, which has led to inaccurate figures about public debt. The ministry agrees that the State Bank debt must not be taken into account as public debt, because these are just instruments for the bank to implement monetary policies and there is no risk of insolvency. However, it believes that the debt incurred by social insurance and social security organizations must be listed as public debt. Regarding the debts incurred by state-owned enterprises, the ministry said only the debts SOEs cannot pay and must be paid by the state instead will be considered as public debt. The liabilities of the Vietnam Development Bank and the Bank for Social Purposes will also be listed as public debt. In principle, the institutions operate not for profit and their solvency is guaranteed by the government. As such, if counting the provision against risk (5 percent of domestic public debt – VND49.5 trillion, or 1.38 percent of GDP), the public debt would be VND2,656 trillion, or 66.4 percent of GDP. The public debt, if calculated in accordance with the 2009 Public Debt Management Law, was 59.9 percent of GDP by the end of 2014. MPI, in its latest report, also pointed out that the criteria for public debt safety assessment are insufficient. Public debt management agencies now only declare the index of ‘government’s debt repayment obligations on state budget revenue’, and do not show the ‘public debt repayment obligations on the state budget revenue’. Therefore, the ministry has suggested more criteria for assessing the public debt safety, including repayment of debt with state budget revenue; the annual state budget overspending or surplus; the efficiency of the use of capital for development & investment; and the nation’s credit rating. MPI believes that the default risk is low in Vietnam. Dat Viet