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Debt Strategy in Vietnam

Nguyen Thi Thanh Ha, MOF of Vietnam

Government Debt
Year 2004 2005 2006 2007 2008

Total 14.31 15.83 17.92 28.25 32.28

Percenta 31.5 29.5 32.2 39.5 35.5
ge of

The debt portfolio’s as of 31.12.08
• Domestic debt: 32.4% of total debt
Bullet bonds and T-bills
• External debt: 67.6% of total debt, in which
ODA loans 74,6% of external debt;
Non ODA 25.4% of external debt (loans and

Sustainable debt
• Vietnam is not eligible for HIPC
• Vietnam public debt and external debt are under
• The external debt is not the major risk

Approaching to the commercial
• Increasing portion of domestic bonds and bills
for financing budget deficit (2005: USD1.6
billions; 2008: 10 billions)
• Issue of international bonds: Nov.2005
• While the economy is growing, the access to
ODA funds will declining

Framework for debt strategy
• Law on State Budget 01/2002 stipulates MOF
is responsible for formulation annual
government borrowing and payment plan
• Public debt law (2009) stipulated principles of
government borrowing: not to use short-time
funds to finance long-term investment;
external funds in commercial term must use
only for the financially viable projects
• Government degrees specified debt indicators
Institutional framework
• Three agencies mainly responsible for
external debt management: MOF, MPI and
SBV, domestic debt: MOF only.
• The formulation of a debt strategy on
public and national debt is in the process
of being institutionalized
• Budget law 2002: MOF is responsible for
devising strategies and plans on borrowing and
repayment of domestic and foreign loans
Improvement of debt management in
Vietnam (2009)
• Establishment of Debt Management
Office to manage external debt and public
• Define overall indicators/ceiling for
public and external debt for formulation
of the public and national debt strategy

Formulation debt strategy
• Public finance strategy for 2001-2010 set
indicators/ceiling: total public debt or national
debt/GDP less than 50%; annual government debt
payment/budget revenue less than 18%
• Domestic borrowing plan based on budged plan:
amount of new borrowing to finance budget deficit
(2009-2012, 3.5% of GDP per year, under budget
deficit 5% of GDP)
• External borrowing plan to finance budget
deficit:1.5% of GDP per year

Formulation debt strategy (2)

• External new borrowing: priority to ODA

loans and concessional loans (2009, USD1.64
External commercial borrowing for on-
lending only (2009, USD 1.1 billion)
Set ceiling for government guarantees (2009,
USD 3.5 billion), fields of guarantees
• Buy-backs and swaps: case by case basis
subject to market conditions
Implementation of Debt Strategy
• ODA loans borrowing as planned, monitor
progress of disbursements
• Domestic borrowing: difficulty due to
interest rates factors, issuing USD
denominated bonds
• Increase of external borrowing on
commercial terms due to difficulty of
issuing domestic bonds
• Interest swaps: floating to fixed
Thank you