Foreign debt surge attributed to enterprises

01-Nov-2018 Intellasia | The Saigon Times | 6:26 AM Print This Post

Local enterprises’ foreign loans have sent the country’s foreign debt soaring in recent years, said minister of Finance Dinh Tien Dung at a question-and-answer session before the National Assembly (NA) today, October 30.

Answering a question on the sharp increase in the country’s foreign debt, minister Dung said that under the Law on Public Debt Management, foreign debts comprise government debts, government-guaranteed debts and enterprises’ debts.

Recently, the government has adopted multiple solutions to settle foreign debts.

As a result, the foreign debt-to-gross domestic product (GDP) ratio has been cut from 60 percent in 2011 to 40 percent at present. Of which, government debts currently account for 21 percent of the GDP, dropping from 24 percent in 2011, while the government-guaranteed debt-to-GDP ratio dropped to 8.7 percent this year from 10.9 percent in 2015.

However, the foreign debts of domestic enterprises have soared in recent years. The sum last year increased by 39.6 percent year-on-year, well above the 25.7 percent recorded in 2016.

The minister added that the foreign debt-to-GDP ratio was 42%, 44.8 percent and 48.9 percent over the past three years. The figure now stands at 49.7%.

The ministry is determined to not use the State budget to restructure State-owned enterprises in accordance with the Politburo’s and NA’s resolutions. Enterprises, including State-run ones, must fulfill their debt payment obligations. Otherwise, they should file for bankruptcy, said Dung.

He also cited the government’s Decree 219, issued in 2013, as noting that the State Bank of Vietnam is in charge of managing enterprises’ and credit institutions’ foreign debts based on the country’s currency and forex market management policies.

The government has asked the central bank to propose solutions to enhance the control over domestic firms’ and credit institutions’ foreign debts to keep the country’s foreign debt within the threshold set by the NA, the minister added.

https://english.thesaigontimes.vn/63787/foreign-debt-surge-attributed-to-enterprises.html

 


Category: Economy, Vietnam

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