The Ministry of Planning and Investment (MPI) projected Vietnam's public debt by the end of 2018 to reach VND3,530 trillion (US$152.34 billion) or 63.92% of GDP, up from the previous rate of 61.3% in 2017.
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Notably, the country's overspending is set to reach 3.71% of GDP in 2018, of which the rate for central government would be 3.6% of GDP.
The ministry's projection for public debt is based on assuming the average economic growth rate of 6.53%, equivalent to nominal GDP of VND5,530 trillion (US$238.54 billion) and inflation rate staying below 4%. This scenario is considered the most likely.
This results in a public debt of VND35 million (US$1,510) per capita, up nearly VND4 million (US$172,60) from VND31.3 million (US$1,350) in 2017.
In the 2018 - 2020 period, Vietnam's ratio of public debt to GDP would reach its peak in 2018 of 63.92%, then decline slightly to 63.46% in 2019 and 62.58% in 2020, which are all below the limit of 65% of GDP set by the National Assembly.
However, the public debt is on growing trend in terms of scale, averaging an increase of VND360 - 380 trillion (US$15.53 - 16.39 billion) per year.
Specifically, Vietnam's public debt is expected to reach VND3,900 trillion (US$168.31 billion) and VND4,300 trillion (US$185.57 billion) in 2019 and 2020, respectively, equivalent to respective nominal GDP of VND6,150 trillion (US$265.36 billion) and VND6,850 trillion (US$295.56 billion), according to the ministry's report.
According to the MPI, overspending in the next three years would be 3.71%, 3.59% and 3.4% of GDP.
In a recent update on Vietnam, HSBC forecast the country's public debt-to-GDP ratio to rise moderately to 61.6% this year and to go down to 61.4% in 2019, assuming a fiscal deficit of 4% of GDP for both years, which is above the government's target deficit of 3.7% for this year.
However, if the government is able to meet its target deficit of 3.7% for the year, the report estimated that the public debt-to-GDP ratio could be as low as 61.2% by the end of the year.
