Vietnam to Issue Dollar-Denominated G-Bonds Domestically

Prime Minister Nguyen Tan Dung has approved to issue dollar-denominated bonds in the domestic market to raise funds for key projects and compensate budget deficit this year.

 

The Ministry of Finance will be authorized to decide the amounts and coupons for the government bonds, which will have maturity terms of more than one-year, the government said, noting that the ministry will seek consultation from the State Bank of Vietnam before issuing the bonds.

 

Legal individuals and institutions in Vietnam are eligible to buy the bonds, which will be issued by State Treasury and listed on the stock market.

 

This year, Vietnam’s national assembly, the highest legislative body, allowed state budget deficit of VND87.3 trillion (US$5.165 billion), or 4.82 per cent of the country’s GDP value, lower than 4.95 per cent last year, the government said.

 

Vietnam issued its first dollar bonds valued at US$750 million in 2005, and since then it has delayed the issues of similar debts for several times.

 

Analysts said the government of Vietnam is trying to prop up its forex reserves which are estimated at more than US$22 billion now, at a time that banks are lowering interest rates and discouraging savings in dollars.

 

They said banks are facing difficulties offering loans in forex currencies because the government only accepts to subsidize dong loans, making pressure to lower interest rates on dollar funds, and will help reduce costs for government’s dollar bonds. (www.chinhphu.vn, Youth)