A view of Ha Noi City. Government debt reached more than VND1.5 quadrillion (US$66.7 billion) last year, expanding nearly 70 per cent during the 2010-15 period. — VNA/VNS Photo

This happened despite a year-on-year decline of 17 per cent in Government debt recorded in 2015, the agency said, citing Ministry of Finance data.

Viet Nam defines Government debt as debts domestically and internationally incurred by the Government and the finance ministry.

According to the ministry, Government debt accounted for 50.3 per cent of national gross domestic product (GDP) as of December 31, 2015.

The ratio exceeded a cap of 50 per cent that the National Assembly (NA) adopted for Government debt over the last five years.

In an online report dated June 30, the ministry said Government debt reached more than VND1.8 quadrillion in 2014. Of the amount, domestic debts were more than VND1 quadrillion and foreign debts were some VND800 trillion.

This is contrary to the situation seen in 2010, when foreign debts were greater than domestic debts. Foreign debts hit VND530 trillion and domestic debts were VND359 trillion, in a total Government debt of VND889 trillion recorded at that time.

The ratio of Government debt to national budget revenues increased from roughly 158 per cent in 2010 to nearly 212 per cent in 2014, although the amount of debts settled by the Government rose from VND87 trillion to VND260 trillion over the period.

In Viet Nam, Government debt is legally known as part of public debt, which is also inclusive of debts underwritten by the Government, and debts incurred by provincial and municipal authorities.

The Central Institute for Economic Management (CIEM) said in a Q1 economic report that Viet Nam's public debt to GDP ratio increased from 50.1 per cent to 62.2 per cent in five years to 2015. Last year's level was close to the red line of 65 per cent set by the NA.

CIEM Director Nguyen Dinh Cung said citing International Monetary Fund data that this ratio of Viet Nam was often 1.5 times higher than that of Thailand, and doubled that of many other ASEAN nations.

While public debt is used to compensate for State budget deficit, the General Statistics Office reported late last week that the deficit was still on the rise after hitting VND82.9 trillion in the first half of this year.

The finance ministry forecast the deficit would reach 4.95 per cent of the GDP this year, while HSBC expected a rate of 6.6 per cent for 2016.

Minister of Finance Dinh Tien Dung said in a recent interview with the Vietnam News Agency that the finance sector will intensify national finance supervision to assure public debt security in the coming years.

He said that, while the sector is to support the country's goals in improving business environment, controlling inflation and stabilise the economy, uncertainty remains in global economic rallies over the next five years.

Rapid changes in trade and investment flows, and complex developments in global goods prices will affect Viet Nam's economic growth, exposing potential risks of national budget imbalance, he said.

"Close watch of economic developments and crude oil prices will be among prerequisite tasks," Dung said, adding that oil-related revenues account for around 10 per cent of the country's total budget revenues.

Viet Nam will strive to increase budget revenues from domestic sources and export activities, while oil price declines and the country entering a variety of free trade agreements – a move that requires tariff cuts – are trimming its budget revenues.

Finance authorities will actively boost transparency in implementing fiscal policies, and accelerate the opening of the financial market in line with international integration commitments and national requirements for economic restructuring.

"Besides guaranteeing State budget revenues, facilitating business growth is what I am most concerned about and want to foster," Dung said.

He said the progress of State-owned enterprises equitisation – a factor impacting on the distribution of the country's financial resources – remains slow.

"We understand that the finance sector cannot deal with budget-related problems by itself. It needs systematic consensus and actions, particularly support of the business community and people," he said. — VNS