Vietnam owes foreign countries 32.5 billion USD

Government and Government-guaranteed foreign debt by the end of 2010 reached 32.5 billion USD, equivalent to 42.2% of GDP and increased by 4.6 billion USD compared to 2009..

The Ministry of Finance last weekend announced detailed data on Vietnam's debt in 2010. Accordingly, the total outstanding foreign debt of the Government by the end of last year reached 27.86 billion USD, equivalent to 85.7% of the total outstanding debt.

Compared to 2010 GDP, foreign debt accounted for 42.2%, up from 39% in 2009 and the highest since 2006. The 42.2% GDP figure is also much higher than the 38.8% that the Government expected at the end of 2010.

Vietnam's foreign debt to GDP ratio has increased sharply since 2006.
Source: MOF

Due to the increase in outstanding debt, the total amount of money that the budget had to spend to pay foreign partners in 2010 was 1.67 billion USD (interest and fees alone were more than 616 million USD), an increase of nearly 30% compared to the figure of 1.29 billion USD in 2009.

Meanwhile, according to the Ministry of Finance's warning, Vietnam's foreign exchange reserves in 2010 were only equivalent to 187% of total short-term debt, a sharp decrease compared to the figures of 290% and 2,808% in 2009 and 2008.

Another notable point, according to the Ministry of Finance's report, is that Vietnam's debt interest rates are on the rise. This may be a consequence of Vietnam's entry into the middle-income group as well as the impact of the country's debt reputation being affected by some macroeconomic instability and the Vinashin incident.

Currently, Vietnam is still mainly borrowing at low interest rates of 1 - 2.99% per year (accounting for 65.5% of total outstanding debt). However, loans with high interest rates of 6 - 10% per year in 2010 also reached 1.89 billion USD, more than double that of 2009. Currently, Vietnam's main creditors are still Japan, France, ADB, WB... These creditors have increased their holdings of Vietnamese Government bonds to more than 2 billion USD in 2010 (compared to more than 1 billion USD in 2009).

According to VnExpress