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Home / Economy / Banking & Finance
Corporate loans make up nearly 50% of Vietnam’s foreign debt
Hai Yen 02:13, 2019/08/10
Most of such loans are from foreign invested companies, especially large-scale FDI companies, accounting for 76% of total foreign debt incurred by enterprises in Vietnam.
Corporate loans made up 48.4% of Vietnam’s foreign debt in 2018, significantly higher than the rate of 25.6% in 2011 and 40.4% in 2016, according to Deputy Prime Minister Vuong Dinh Hue. 
 
Illustrative photo.
Illustrative photo.
Most of such loans are from foreign invested companies, especially large scale FDI companies, accounting for 76% of total foreign debt incurred by enterprises in Vietnam, Hue said at a meeting on August 9 discussing Vietnam’s foreign debt situation in the 2011 – 2018 period. 

On the contrary, external debt incurred by the government is fast declining, Hue noted. 

Meanwhile, the ratio of repayment to trade and service turnover was estimated at 25%, meeting international regulations and requirements. 

An increase in foreign debt has met capital needs for socio-economic development and higher growth rate, but also impacts the repayment capability of the country, Hue added. 

To ensure the safety limit of public and foreign debts, as well as the stability of the macro-economy, Hue requested government agencies to tighten debt management in compliance with the current regulation. 

Additionally, Hue expected the Ministry of Planning and Investment to make a comprehensive assessment on foreign investment, especially large-scale FDI projects and the impact of foreign debts on the country’s economic growth target. 

As of the end of 2017, Vietnam’s foreign debt to GDP reached 48.9%, fast approaching the threshold of 50% set by the National Assembly. A year later, this figure declined to 46%, of which debts of the government accounted for 19.3% of GDP, government-guaranteed debt 4.4% and corporate debt 22.3%. 

In 2018, the Vietnamese government set the limit for government-guaranteed debt of US$700 million, however, no project has been qualified for the loan as the government shifts its priority to lending from domestic source with better interest rate. 
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