High economic growth could see Vietnam’s public debt drop this year, according to the Ministry of Planning and Investment.
The ministry said in a report Monday that public debt could go down 2.3 percentage points over last year to 61.4 percent of the GDP.
The report says that this means a public debt of VND3,130 trillion ($133.9 billion) over a GDP of VND5,100 trillion ($218.2 billion).
Tran Quoc Phuong, director of the Department for National Economic Integration under the ministry, said that the estimate is based on the economic growth of 6.7 percent forecast for this year.
The report estimates state budget collection to top VND1,350 trillion ($57.7 billion) this year, up 5.5 percent over last year.
It estimated overspending at 3.67 percent of the GDP.
Phuong said that although the economy will be stable this year, there will be impacts from outside.
“There will be pressure from the U.S. federal interest rate hike, higher oil and consumer goods prices in the world, escalating trade tension between the U.S. and major economies and rising protectionism,” he said.
This will create pressure on Vietnam’s monetary and inflation control policies, he added.
Vietnam’s public debt had risen to as much as 64 percent of GDP between 2011 and 2015, mainly because of overspending. But the figure was projected to fall to 60 percent by 2020, from an expected 61.3 percent this year, Minister of Finance Dinh Tien Dung said on September 12, citing strong economic growth and debt reform.
The National Assembly has mandated a debt ceiling of 65 percent of the GDP.
The government plans to gradually cut state budget overspending to ensure public debt safety by setting an overspending target of 3.6 percent of GDP in 2019, and 3 percent of GDP in 2020.
Vietnam reached its highest economic growth in 10 years by expanding 6.81 percent in 2017, slightly higher than the target of 6.7 percent set by the National Assembly. Its GDP growth in the first half of 2018 is 7.08 percent.