The new Government has sent to the National Assembly Standing Committee a report on the public debt situation in 2023, the forecast for 2024, and a three-year summary of the five-year public debt borrowing and repayment plan for the 2021-2025 period.
Pay off debt in full as committed
In 2023, the National Assembly approved a total loan of 621,015 billion VND from the central budget, of which the loan to cover the budget deficit is 430,500 billion VND (equal to 4.18% of GDP), and the loan to repay principal is 190,515 billion VND.
In addition, the Government approved a loan for re-lending ODA loans and foreign incentives of VND 23,394 billion.
Based on the implementation of the first 9 months of the year, the Government estimates that the mobilization demand for the whole year of 2023 is estimated at VND 604,379 billion (equal to 93.8% of the plan), of which loans for re-lending are VND 14,626 billion (62.5% of the plan).
Domestic borrowing is expected to mobilize about VND 547,085 billion, mainly from issuing government bonds. The average issuance term is 12.6 years, higher than the target set by the National Assembly of 9-11 years in Resolution No. 23/2021/QH15 dated July 28, 2021.
The average remaining term of the government bond portfolio is 9 years, down 0.14 years compared to 2022; the average issuance interest rate is 3.7-4%/year, up 0.22 - 0.52 percentage points compared to 2022 (3.48%/year).
ODA loans and preferential loans from foreign donors are about 57,294 billion VND, accounting for about 10%, of which loans for general budget support to serve the Economic Recovery and Development Program are estimated at 15,000 billion VND, and loans for re-lending are estimated at 14,6262 billion VND.
The 2023 budget deficit is estimated at about 4% of GDP.
According to the report, the total debt repayment of the Government in 2023 is estimated at 311,537 billion VND, of which direct debt repayment is estimated at 279,742 billion VND, equal to 95.3% of the estimate; repayment of foreign loans for re-lending is estimated at 31,795 billion VND, equal to 93.8% of the plan.
The report stated that the Government's debt repayment in 2023 was fully implemented as committed, within the budget approved by competent authorities. During the year, exchange rates of currencies fluctuated, leading to less use of the budget in VND when purchasing foreign currency to repay the debt.
Regarding the situation of borrowing and repaying foreign debts of the country, according to the assessment of the State Bank, it is expected that the foreign commercial loan limit of enterprises and credit institutions under the self-borrowing and self-repayment method in 2023 will be equal to 100% of the limit approved by the Prime Minister.
Specifically, it is estimated that the medium- and long-term foreign commercial loan limit will be 7,500 million USD, with short-term loan balance increasing by about 20% compared to the end of 2022.
The country's foreign debt to GDP by the end of 2023 is expected to be around 37-38% of GDP, ensuring the target within the country's foreign debt ceiling of 50% of GDP approved by the National Assembly. The scale of foreign loans of enterprises and credit institutions in the form of self-borrowing and self-repayment accounts for around 26-27% of GDP.
Regarding debt repayment, the country's foreign debt repayment target compared to the export turnover of goods and services in 2023 (excluding short-term principal repayment obligations under 12 months) is expected to be at 7-8%, ensuring within the limit allowed by the National Assembly of 25%.
The Government expects debt indicators by the end of 2023 to be within the ceiling and safety warning thresholds decided by the National Assembly.
Specifically, public debt/GDP is estimated at 39 - 40%. Government debt/GDP 36 - 37%; foreign debt of the country/GDP 37 - 38%. Direct debt repayment obligation of the Government/state budget revenue 20 - 21%, foreign debt repayment obligation of the country/export turnover 7 - 8%.
2024 budget deficit of about 3.6% of GDP
Based on the main macroeconomic indicators on the socio-economic situation, the state budget in 2023, and the 2024 plan submitted by the Government to competent authorities, Vietnam's economic growth target in 2024 is expected to be around 6-6.5%.
The estimated state budget revenue in 2024 is 1,650 trillion VND, the state budget deficit is about 3.6% of GDP, and the need to borrow and repay debt to implement the state budget estimate in 2024.
The government needs to borrow nearly VND680,000 billion in 2024.
Regarding capital mobilization, the Government said that the total borrowing demand of the Government in 2024 is 676,057 billion VND. Including, borrowing to cover the central budget deficit is 372,900 billion VND; borrowing to repay the principal debt of the central budget is about 287,034 billion VND; borrowing for re-lending is 16,123 billion VND.
Mobilized resources flexibly combine government bond issuance tools, ODA loans, foreign preferential loans, and, if necessary, mobilize from other legal financial sources.
Based on the current Government debt portfolio and the Government's task of mobilizing loans in 2024, the Government estimates that the Government's direct debt repayment obligation will be about VND 395,874 billion, of which the principal repayment will be about VND 287,034 billion and the interest repayment will be about VND 108,840 billion. The debt repayment obligation for re-lending will be about VND 58,245 billion (principal repayment of about VND 50,502 billion, interest repayment of about VND 7,743 billion).
It is expected that by the end of 2024, the Government's direct debt repayment target compared to State budget revenue will be guaranteed within the ceiling of 25% approved by the National Assembly in Resolution 23/2021/QH15.
According to the Government, in case of positive GDP growth reaching the target assigned by the National Assembly, it is forecasted that by the end of 2024, public debt will be about 39 - 40% of GDP, government debt will be about 37 - 38% of GDP, and the country's foreign debt will be about 38 - 39% of GDP; the Government's direct debt repayment obligation compared to the State budget revenue will be about 24 - 5%, ensuring that it is within the ceiling and threshold allowed by the National Assembly .
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