Compared to the same period last year, government borrowings in January-September almost doubled.
The country has set a target of borrowing about US$20 billion this year to meet debt repayment obligations, offset the state budget deficit, raise funds for government spending and bolster an economy dogged by adverse weather conditions and an environmental disaster.
Vietnam's debt servicing costs are estimated at US$12 billion this year. As of September 25, payments had reached nearly US$7.9 billion, of which 78% was allocated to settle debts secured from local bond sales.
In recent years, Vietnam has started to borrow more from local debt markets. As a percentage of the total outstanding government debt, domestic debt rose from 39% in 2011 to 57% in 2015, said Vo Huu Hien, deputy head of the Department of Debt Management and External Finance.
By shifting towards domestic sources to raise funds, Vietnam is relying less on foreign creditors, cutting the ratio of foreign loans significantly from 61% in 2011 to 43% in 2015.
Official figures show the budget deficit stood at 4.4% of GDP in 2011, 5.36% in 2012, 6.6% in 2013, 5.69% in 2014 and 6.1% last year.
The National Assembly, Vietnam's legislature, has tried to place a cap on the budget deficit in recent years, but state budget expenditure has remained higher than targeted.
Vietnam ran an estimated deficit of VND152 trillion (US$6.8 billion) in the January-September period this year, said the General Statistics Office.
The World Bank forecasts that Vietnam’s public debt will climb to 63.8% of the country’s GDP in 2016, 64.4% in 2017 and 64.7% in 2018.
Slumping crude oil prices have cut budget revenues considerably. Government statistics show that crude-related revenue, which made up 30% of the nation’s budget in 2005, fell to 20% in 2010 and accounted for about 10% in 2015.
The country posted a sharp decline in Jan-Sept revenue from crude oil to an estimated VND29.8 trillion, 42% down from the same period last year.
The budget deficit is expected to widen further as the country lowers taxes to support businesses in the private sector.
The finance minister said that budget revenue from taxes and levies, excluding income from crude oil exports and taxes on land use, account for only 15.6% of gross domestic product (GDP), which is considered low compared to Thailand’s 23%, Laos’ 23.4% and Malaysia’s 24.5%.
Last year’s public debt, which in Vietnam also includes loans guaranteed by the government, stood at 62.2% of GDP, which was relatively close to the ceiling of 65% set by the National Assembly.
Vietnam's government set an economic growth target of 6.7% for this year, following 6.68% growth in 2015.
However, adverse weather conditions and mass fish deaths along the central coast have forced the government to revise down the 2016 target to between 6.2% and 6.5%.