The government has suggested international bond issuances to restructure domestic debts. — Illustrative image/ Photo vietnamnet

The bonds were expected to have terms of 10 to 30 years, with interest rates to be set depending on international capital market conditions at the times of issuance.

Minister of Finance Dinh Tien Dung told a National Assembly (NA) Standing Committee meeting on October 12 that he would be authorised by the government to present the issue at the upcoming NA sessions, for permission to implement it from 2017.

Dung said that, while funds that the government borrowed to compensate for national budget overspending remained limited, the amount of State bonds mature during 2015-2016 was estimated to be significant, at roughly VND363.17 trillion (US$16.14 billion).

In the first nine months of this year alone, State bond issuances totalled nearly VND127.50 trillion ($5.67 billion), or around half of the annual quota, while up to VND160.70 trillion ($7.14 billion) in government debts was due.

Dung said the international bond issuances were necessary as "other domestic funding sources had been mobilised at maximum", while Viet Nam no longer enjoyed financial assistance from the World Bank's International Development Association.

The government has mentioned this issue several times this year, after the country successfully issued bonds worth $1 billion in the international market through the Bank for Foreign Trade of Viet Nam, or Vietcombank, last year.

Dung affirmed that the possible additional issuances worth $3 billion would still guarantee that foreign debts account for no more than half of the total government debts, in accordance with the country's strategy to manage public debts until 2020, with vision until 2030.

The government also expected such issuances would help domestic banks ease the pressure on their foreign currency sources, and maintain low interest rates to support local enterprises.

The issuances would also provide the country with more foreign currency supplies and help it improve the balance of payment, rationalise the rates of exchange and stablise macro-economic conditions.

However, any additional issuances now would face obstacles related to the legal framework.

The new law on the State budget allows the government to issue international bonds to cover budget overspending. It has been issued this year but will only take effect in more than a year from now, in 2017.

The law on public debt management does not permit the country to borrow foreign currencies to restructure debts in dong. The Ministry of Finance said it would propose revisions for this shortcoming.

Earlier this month, the State Bank of Viet Nam lent the ministry VND30 trillion ($1.33 billion) to help ease tension related to State budget overspending.

The ministry's latest report said the State budget overspending had reached some VND27.54 trillion ($1.22 billion) in September, driving the cumulative overspending for the first nine months of this year up to VND140.97 trillion ($6.27 billion).

According to The Economist, Viet Nam's public debts totaled $92.64 billion as of October 12, equivalent to about $1,017 per capita. — VNS