Viet Dragon Securities Corporation releases report stating principal debt may increase by between $660 million and $880 million after VND devaluation.
The adjustment made by the State Bank of Vietnam (SBV) to the VND/USD exchange rate will make Vietnam’s principal debt increase by between VND15 trillion ($660 million) and VND20 trillion ($880 million) calculated in the domestic currency, according to a strategic report from Viet Dragon Securities Corporation (VDSC).
It wrote that the exchange rate adjustment in the short term will not affect inflation but will have some impact on public debt.
According to the World Bank, as at the end of 2014 Vietnam’s total debt was estimated at $110 billion, or 59.6 per cent of GDP. The government’s foreign debt was stable at 27 to 28 per cent of GDP and accounts for half of all public debt.
Based on movements in the exchange rate since early this year, repayment obligations in domestic the currency have increased by VND15 trillion ($660 million) and VND20 trillion ($880 million).
The SBV said that the exchange rate level should be considered in the context of the economy as a whole, not only as regards export or imports. SBV Deputy Governor Nguyen Thi Hong said that some businesses will benefit from exports while imports and foreign debt will increase.