Vietnam’s Government debt is forecast to stand at 40% of its gross domestic product (GDP) this year, up from 36.5% in 2008, said the National Assembly Finance and Budget Committee. The debt could rise to 44% of GDP next year given the momentum.

State budget deficit over the past year is the main cause for the huge national debt, said deputy Le Van Thanh from Haiphong City. Other reasons are spending from government bonds and foreign loans made to local enterprises.

High credit growth in the country will also cause interest rates and product prices to soar. The payment balance deficit and the decrease of foreign reserves will also add to the debt.

The deputies warned that the national debt would reach an unsafe level if the Government failed to take necessary measures to tackle the growing budget deficit, which is expected to stand at 6.9% of GDP this year.

Concerning the Government’s report on the socio-economic situation this year, the deputies said the Government had yet to point out specific causes for the low macro-economic indexes.

The indexes also revealed many problems in the economy. The Government has disbursed a lot of money for the stimulus package but mainly to solve problems in the short term, said deputy Duong Anh Dien from Haiphong City.

Dien suggested the Government prevent the risk of high inflation, especially as the second stimulus package could be launched soon. “If we pump money into the market, prices will only increase three months later. Next year will be the time for the problem,” he explained.

Deputy Vu Quang Hai from Hung Yen Province said the assessment of agriculture, rural areas and farmers was not clear in the report. Some localities posted negative growth without any specific explanations, he said. Vietnam should be careful with the second stimulus package, otherwise it would make the government debt skyrocket, Hai added.