Vietnam’s External Debt Rises to 42% of GDP

Vietnam’s national debt increased  16% to $32.5 billion last year and now stands at 42% of GDP, the government reports belatedly.  In 2010, the country approved $5 billion in new foreign loans after increases of $3.6 billion, $2.6 billion and $6.1 billion the prior three years.  Meanwhile, foreign currency reserves dropped from nearly $9 billion in 2009 to $4 billion in 2010.

Interest rates on the debt has increased to the extent that Vietnam owes $1.5 billion annually in interest and principal — 39% of that in Japanese yen, 27% in International Monetary Fund SDRs, 22% in US dollars and 9% in Euros.

The 42% of GDP, though a significant increase, is within World Bank standards — and far from the ratio in many industrialized countries, including 170% in Japan, 104% in Italy, 67% in France and 62% in the US.  Even so, it is sign of stress in this dynamic frontier market. 

More on Vietnam’s debt

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