Vietnam is steadily moving towards a market-orientated socialist economy. As its economy has developed, its government has faced new challenges in adapting to international markets. In particular it has had to respond to the challenge of an increased exposure to liabilities, especially those relating to external debt. We have therefore been working with it to strengthen its external debt and liability management.
The institutional environment for managing the government's debt has been greatly improved through initiatives such as Technical Debt Working Groups among the main government agencies. Building on this framework, the government now appears determined to implement one of our key recommendations, which is to consolidate its domestic and external debt operations into a unified function within the finance ministry.
As well as strengthening its institutional structure, we have built the capacity of the external finance department to compile a database of government and government-guaranteed external debt. With this enhanced data, and our support, the government is now able to conduct its own comprehensive debt sustainability analysis where previously it relied on analysis by international financial institutions.
The project has achieved its objectives of:
- improving the cost-effectiveness of debt servicing and assessing its exposure to contingent liabilities;
- enhancing institutional and regulatory frameworks relating to debt management;
- developing external debt policies and foreign borrowing strategies;
- developing human capacity for external debt management.
- As a result, Vietnam now has a sustainable strategy to finance its development for the next five years.