February 25, 2017 05:00

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Brexit does not impact on public debt

15:52 | 05/07/2016

VCN- Deputy Director of Debt Management Department, Ministry of Finance, Mr. Vo Huu Hien confirmed that until now, the incident that UK left EU didn’t have much impact on the public debt of Vietnam Government.

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The operations in a bank.

According to Vo Huu Hien, the Brexit has impacted the world economy, not just Vietnam. One of these influences is that the exchange rate changed because many countries introduced policies about the exchange rate for its currency.

According to calculations, this incident has caused the British pound to depreciated by about 8%; the dollar has appreciated in a short time, but soon it was back to normal; the EURO and the yuan have also depreciated. Only the yen is still appreciating.

Mr. Hien said that, in the structure of Vietnam's public debt now, the government debt in Vietnam dong accounts for about 55%, debt in USD accounted for 16%, the yen debt by about 13%, the Euro debt by approximately 7 % and the British pound debt by 2%. The rest is owed by the other currencies. Assessment of the impact of exchange rates on the public debt of the Government of Vietnam is a major problem for the long-term debt. However, the State Bank made appropriate exchange rate adjustments after Brexit, which made exchange rate fluctuations have little impact on public debt.

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Mr. Hien analysed, there is only 2% British pounds in debt structure, the British pound depreciated by 8%, bringing the benefit to Vietnam. Besides, the depreciation of Euro and the USD also helped Vietnam devalue public debt. In contrast, the appreciation of the yen made Vietnam debt increased. Thus, in general, Brexit hasn’t had a major impact on public debt in Vietnam.

By Thuy Linh/ Hoang Anh