VINACHEM

The total was equivalent to about 42.2 per cent of the country's gross national product (GDP) of $104 billion.

Government debt accounted for about $27.9 billion of the total, with local governments and State-owned companies accounting for the remaining $4.6 billion.

Sovereign borrowing costs were low, with $23.4 billion worth of the debt carried at low fixed interest rates of 1-5.99 per cent per year.

However, the volume of new debt with an interest rate ranging from 6-10 per cent yearly was doubled to $1.89 billion last year from $919.04 million in 2009.

"If Viet Nam, or any developing country, can maintain 5-5.5 per cent economic growth, the country definitely has the capacity of paying sovereign debt of $2 billion per year," said economist Vu Thanh Tu Anh, director of research for the Fulbright programme in HCM City.

The ratio of foreign reserves against total short-term debt also plunged dramatically to 187 per cent in 2010, compared with 290 per cent in 2009; 2,808 per cent in 2008; and 10,177 per cent in 2007.

The new borrowing cost "is an obvious consequence of Viet Nam joining the ranks of middle-income nations," said Anh.

Viet Nam's leading creditors in 2010 were the governments of Japan, France, Russia and Germany, the International Development Association, the Asian Development Bank, and the International Monetary Fund. Bondholders held $2 billion in 2010, up from over $1 billion a year earlier.

Last year, Viet Nam repaid $1.67 billion to its creditors, up 30 per cent against the previous year. The country was expected to repay $1.3 billion in principal and interest this year.

The Ministry of Finance bulletin set forth a repayment plan through 2026. Even if the country takes out no further foreign loans, Viet Nam's debt payments will total nearly $8.4 billion in principal, fees and interest during 2012-16, a potential challenge for the Government.

The nation has been punctual in its debt payments since 1993, the ministry noted. — VNS