A United Nations analyst contends Vietnam’s budget and trade deficits require urgent attention or else the country’s education, social security and health care will suffer. Vietnam’s budget and trade deficits are forcing the government to choose between servicing its debt and investing in social needs.
Vietnam’s budget deficit soared to 9% in 209 and eased somewhat last year before the government aimed to get the deficit below 5% this year. The trade deficit nearly tripled to $14.1 billion in 2007, then took another leap to $18 billion in 2008 before dropping to $13 billion in the past two years. That’s still high enough to worry foreign investors because the foreign debt load is estimated to be as high as 50% percent of GDP.
That’s why all three major ratings agencies downgraded Vietnam last year — and the reason authorities are struggling to stabilize the economy.
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