To achieve consistency in the debt data series, we selected the most recently published data. That is, if data were available in the 2006 National Debt Report, we used that data instead of all data published in previous reports. Data that were not available in the 2006 Report were searched for in the 2005 Report, and if not, data published in 2003 or 2000 were used.
In all national debt reports, Vietnam's foreign debt
measured in millions of US dollars at current prices. To be able to compare the 11-year value series 1995-2005, we convert all these values to
Vietnamese Dong at 1994 constant prices, using the IMF annual exchange rate between the US dollar and the Vietnamese Dong and the GDP deflator calculated from the General Statistics Office. This conversion process is presented in Table 2.4.
Data on the components of total debt – including public and private debt, and data on debt service obligations are also converted similarly in the calculations below.
2.1.2.2.Long-term debt and short-term debt
Vietnam's foreign debt consists mainly of medium and long-term debt. Short-term debt accounted for only 4 to 11% in the period before 2000, and since 2001 the short-term debt ratio has dropped below 2% of total annual accumulated debt. This situation is presented by specific data in Table 2-5 and Table
®å 2-4.
Due to the successes in economic development and aid attraction policies, during this period Vietnam received a large amount of official development assistance (ODA) from bilateral and multilateral donors. Total foreign debt,
In particular, public debt in the form of ODA loans increased rapidly. The average annual growth rate of foreign debt reached over 7.3%.
Table 2-5 Total foreign debt and structure of short-term debt, long-term debt, 1995-2005
Unit: Million USD, %
Year
jealousy | Medium and long term debt | Short-term debt | |||
Money | Ratio to total debt | Money | Ratio to total debt | ||
1995 | 7,259 | 6,478 | 89.2 | 781 | 10.8 |
1996 | 9,029 | 8,024 | 88.9 | 1,005 | 11.1 |
1997 | 9,578 | 9,185 | 95.9 | 393 | 4.1 |
1998 | 9,847 | 9,173 | 93.2 | 674 | 6.8 |
1999 | 9,756 | 9,199 | 94.3 | 557 | 5.7 |
2000 | 12,027 | 11,499 | 95.6 | 528 | 4.4 |
2001 | 12,316 | 12,202 | 99.1 | 114 | 0.9 |
2002 | 12,345 | 12,183 | 98.7 | 162 | 1.3 |
2003 | 13,535 | 13,347 | 98.6 | 188 | 1.4 |
2004 | 15,390 | 15,142 | 98.4 | 248 | 1.6 |
2005 | 16,924 | 16,628 | 98.3 | 296 | 1.7 |
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Source: IMF, 2000, 2003, 2005, 2006. Converted to Vietnamese Dong at 1994 comparative prices using IMF exchange rates and General Statistics Office deflation coefficients. [53-58], [39]
140,000
120,000
100,000
80,000
60,000
40,000
20,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-
Total foreign debt, 1995-2005 (billion VND, 1994 constant prices)
Medium and long-term debt (billion VND) Short-term debt
Figure 2-4 Total Foreign Debt, 1995-2005
2.1.2.3.Public debt and private debt
By debt owner, public debt accounts for the majority of Vietnam's total medium- and long-term debt during the entire period (see Figure 2.5). Private debt accounted for more than 30% at the beginning of the period, then the proportion of private debt gradually increased.
By 1998, it reached about 40%, then gradually decreased and stabilized at below 20% from 2002.
To date, private enterprises in Vietnam have had very limited access to foreign loans. The majority of private debt belongs to foreign-invested enterprises (FDI). According to the report, the
By the end of 2002, foreign-invested enterprises had borrowed 2.9 billion USD, and domestic enterprises' debt guaranteed by the Government was 0.9 billion USD. The total foreign debt of domestic private enterprises was less than 40 million USD. [21]
Data on accumulated annual medium- and long-term foreign debt of the public and private sectors are presented in Table 2-6.
Table 2-6 Structure of public debt and private debt in total medium- and long-term debt, period 1995-2005
Year
Medium and long term debt | Public debt | Nỵ t− | Public debt ratio in total debt | |||
Money | Proportion of total medium and long term debt | Money | Proportion of total medium and long term debt | |||
1995 | 6,478 | 4,525 | 69.9 | 1,953 | 30.1 | 62.3 |
1996 | 8,024 | 5,081 | 63.3 | 2,943 | 36.7 | 56.3 |
1997 | 9,185 | 5,562 | 60.6 | 3,623 | 39.4 | 58.1 |
1998 | 9,173 | 5,508 | 60.0 | 3,665 | 40.0 | 55.9 |
1999 | 9,199 | 5,978 | 65.0 | 3,221 | 35.0 | 61.3 |
2000 | 11,499 | 8,620 | 75.0 | 2,879 | 25.0 | 71.7 |
2001 | 12,202 | 9,402 | 77.1 | 2,800 | 22.9 | 76.3 |
2002 | 12,183 | 9,790 | 80.4 | 2,393 | 19.6 | 79.3 |
2003 | 13,347 | 10,889 | 81.6 | 2,458 | 18.4 | 80.5 |
2004 | 15,142 | 12,248 | 80.9 | 2,894 | 19.1 | 79.6 |
2005 | 16,628 | 13,632 | 82.0 | 2,996 | 18.0 | 80.5 |
Structure of public debt and private debt in total medium and long-term debt
100%
80%
60%
%
40%
20%
0%
1995 1997 1999 2001 2003 2005
Year
Source: IMF, 2000, 2003, 2005, 2006, [53-58]
Public debt/medium and long-term debt ratio Private debt/medium and long-term debt ratio
Source: IMF, 2000, 2003, 2005, 2006, [53-58]
Figure 2-5 Ratio of public debt and private debt in total medium- and long-term debt in the period 1995-2005
2.1.2.4.Foreign debt repayment situation
According to the National Debt Report, Vietnam only started paying its debt in 1995 (IMF, 2000). In total, in the 11 years from 1995 to 2005, there were more than 17.8 billion dollars.
used to repay foreign creditors, of which 8.85 billion (49.7%) came from the public sector, and approximately 9 billion (50.3%) from the private sector. On average, during this period, about 1.6 billion dollars were used each year to repay debt, equivalent to
equivalent to 5.1% of annual GDP. [53-58] During the period 1995-1999, part of the debt repayment consisted of payments to Russia for its debt to the former Soviet Union. By 2000, the two governments of Vietnam and Russia had agreed to liquidate this debt, and the total value of debt repayment from 2000 onwards only related to new loans. Data on foreign debt repayment by borrower are presented in Table 2-7.
Table 2-7 Debt repayment structure by borrower, period 1995-2005
Year
Total debt repayment (million USD) | Public debt repayment (million USD) | Private Debt Repayment (USD Million) | Public debt repayment/total debt repayment (%) | Private debt repayment/total debt repayment (%) | |
1995 | 920 | 884 | 52 | 96.1 | 5.7 |
1996 | 994 | 855 | 139 | 86.0 | 14.0 |
1997 | 1,507 | 930 | 576 | 61.7 | 38.2 |
1998 | 1,674 | 864 | 809 | 51.6 | 48.3 |
1999 | 1,807 | 766 | 1,041 | 42.4 | 57.6 |
2000 | 1,809 | 779 | 1,029 | 43.1 | 56.9 |
2001 | 1,894 | 789 | 1,105 | 41.7 | 58.3 |
2002 | 1,637 | 782 | 855 | 47.8 | 52.2 |
2003 | 1,768 | 703 | 1,065 | 39.8 | 60.2 |
2004 | 1,858 | 775 | 1,083 | 41.7 | 58.3 |
2005 | 1,952 | 725 | 1,227 | 37.1 | 62.9 |
Ceng | 17,820 | 8,853 | 8,981 |
Source: IMF, 2000, 2003, 2005, 2006, [53-58]
This debt repayment rate does not fully reflect the actual debt repayment requirements, because to date, many ODA loans are still in the grace period. This is reflected in the detailed debt repayment data of the public and private sectors. The majority of principal repayments are by the private sector. The public sector accounts for only 42.3% of the total VND117.08 trillion (US$13.14 billion) of principal repayments. [53-58] This means that the impact of debt repayments to date has not really been clearly felt on the economy. However, this impact will increase in the coming years, when many public debts come due.
Of the total VND36.1 trillion in debt repaid during this period, the public sector accounted for over 66%. Detailed data on foreign debt repayment by principal and debt and by borrowers are summarized in Chart 2.6.
Foreign debt repayment, 1995-2005 (Billion VND, 1994 constant price)
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-
Repaying public debt Repaying public debt
Private Debt Repayment Private Debt Repayment
Source: IMF, 2000, 2003, 2005, 2006. Converted to Vietnamese Dong at 1994 comparative prices using IMF exchange rates and General Statistics Office deflation coefficients. [53-58], [39]
Figure 2-6 Foreign debt repayment by creditor, 1995-2005
2.2. Current status of foreign debt management
2.2.1 Institutional framework and debt management organization
2.2.1.1. Institutional framework for foreign debt management in Vietnam
Until the end of 2005, the highest legal document regulating the activities of
Vietnam's foreign debt repayment activities are Decree No. 90 (1998) of the Government and the Decisions and Circulars guiding its implementation. These are Decision No. 233 (1999) promulgating the Regulation on Government Guarantees for foreign loans of Enterprises and Credit Institutions and Decision No. 02 (2000) of the Minister of Finance promulgating the Regulation on re-lending of aid capital and foreign loans.
In 2002, the revised Budget Law determined the main directions in organizing the foreign debt management system, stipulating that the Ministry of Finance is responsible for unified state management of government borrowing and debt repayment, national borrowing and debt repayment, and developing strategies and plans for domestic and foreign borrowing and debt repayment. [34] In 2003, the Ministry of Finance issued a Decision on reorganizing the Foreign Finance Department and the International Aid Management and Reception Board - key units assisting the Ministry in planning, monitoring and managing foreign debt. Decree No. 134 (2005) of the Prime Minister on Regulations on foreign borrowing and debt repayment management replaced Decree No. 134 (2005) of the Prime Minister on Regulations on foreign borrowing and debt repayment management.
Decree 90 (1998) mentioned above. Following that, a series of new Regulations and Decisions
issued in 2006 demonstrates the determination to institutionalize foreign debt management areas to enhance the effectiveness of comprehensive state management in this area.
Regulations on collecting, reporting, synthesizing, sharing and publishing information on foreign debt issued in October 2006 and Regulations on granting and managing Government guarantees for foreign loans issued in November 2006 (replacing the Government guarantee regulations issued since 1999).
The Decision of the Minister of Finance promulgating the Regulation on establishment, use and management of the Foreign Debt Repayment Accumulation Fund in October 2006. These efforts show a system of planning and managing foreign debt with many innovations.
is gradually forming.
The following thesis will reflect the foreign debt management organization system based on the latest legal documents in this field.
2.2.1.2.Vietnam's foreign debt management organization system
Vietnam's foreign debt is comprehensively managed by the state. Specifically, from capital mobilization, reception, allocation, use, management, monitoring and supervision, all must be implemented by assigned agencies. [12] The foreign debt strategy and the country's medium- and long-term borrowing and debt repayment plans must be approved by the National Assembly. The Prime Minister is the highest level of the state with the authority to approve the long-term debt strategy, the medium-term debt management program and the annual plan on foreign borrowing and debt repayment. [12] The Prime Minister also directly approves a number of specific contents of strategic importance, such as:
List of projects using foreign loans;
List of programs and projects proposed to use official development assistance (ODA) loans for special purposes;
Government guarantees issued by the Ministry of Finance for loans of organizations;
Government guarantees issued by the State Bank for loans of organizations;
Use of foreign loans not according to projects;
Using resources from international bond issuance;