Vietnam weighed down with debt as income per capita remains low
10-09-2015 13:39:09+07:00
Vietnam weighed down with debt as income per capita remains low
Vietnamese income per capita is much lower than other regional countries, and the ratio of public debt on GDP is high and on the rise.
The Ministry of Finance’s (MOF) bulletin released in November 2014 showed that Vietnam’s public debt had reached 54.2 percent of GDP by the end of 2013.
However, a research team from the Ministry of Planning and Investment’s Policy & Development Institute said that several high risks to Vietnam’s public debt were not mentioned in the report.
A report on Vietnam’s public debt in 2015-2020 pointed out that three more other things need to be considered when calculating public debts, including the liabilities of the central and local budgets for which the payment sources have not been allocated, roughly VND165 trillion.
It is necessary to count debts incurred by the Vietnam Development Bank and the Vietnam Bank for Social Policies, excluding guaranteed bonds, worth VND41.4 trillion, and the estimated amount of VND49.5 trillion the government would have to pay for some items.
These include the debt in state-owned enterprise restructuring, bank restructuring, and debts to settle the problems in national defence & security, preventive health care, natural calamities and epidemics.
If following such the calculation method, according to the Policy & Development Institute, Vietnam’s public debt must be 61.28 percent of GDP by the end of 2013, or 7 percent higher than that announced by MOF.
In 2014, it is estimated that the ratio of public debt on GDP is 66.4 percent, lower than the world’s average level (79.7 percent) and developed economies (108.5 percent), but 1.7 times higher than that of developing countries and the highest in South East Asia.
Comparing the figures about average income, population and productivity, the research team commented: “Vietnam is weighed down with debt”.
By the end of 2013, Vietnam’s average income per capita was $1,910, while the public debt was 61.28 percent of GDP, while the figures were $2,765 and 50.2 percent of GDP, respectively, in the Philippines, and $3,645 and 24.4 percent in Indonesia.
Of the lower middle-income countries ($3,000-5,000), Vietnam has the highest proportion of older population: about 7 percent of population are aged over 65, while the figures are 4 percent in Laos and the Philippines, and 5 percent in India.
According to the International Labor Organization, Vietnam is among the countries with the lowest productivity in Asia Pacific. Its productivity is 15 times lower than Singapore’s and 11 times lower than Japan’s.
Dao Van Hung, director of the Policy & Development Institute, has suggested setting up a new ceiling for the public debt to adapt to the new conditions in 2016-2020 -- about 68-70 percent instead of 65 percent currently.
