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Vietnam External Debt
Vietnam is one of only two communist countries--the
Democratic People's Republic of Korea (North Korea) is the other-
-to default on its international debts. Vietnam's scheduled 1982
payments to Western creditors were estimated at US$260 million,
well over the US$182 million value of Vietnam's exports that year
to noncommunist countries with hard, or convertible, currencies.
The Soviets cancelled some US$450 million of Vietnam's debts in
1975 and began a program of grant aid. As Vietnam-Comecon trade
expanded in the 1980s, however, so did Vietnamese debts to
Comecon countries. Comecon funds for project assistance and
related equipment often were wasted because of mismanagement or
remained frozen for years in projects not scheduled to become
productive until the middle or late 1980s. Projected exports
frequently fell short of expectations, widening trade deficits
and requiring additional balance-of-payments aid. Taking the long
view, the Soviet Union shifted its assistance during the Third
Five-Year Plan to concessionary loans, repayable at 2 percent
interest over a period of 20 to 30 years.
As Vietnam's international debt grew steadily through the
1980s, the debt owed to the Soviet Union and other Comecon
countries accounted for larger portions of the total foreign
debt. In 1982, according to estimates by the Organization for
Economic Cooperation and Development (OECD), Vietnam's total
foreign debt was US$2.8 billion. Of this debt, US$1.7 billion, or
60 percent, was owed to OECD member countries (advanced
industrial Western countries) and their capital markets or to
multilateral lenders. A large portion of Vietnam's international
debt covered the balance of payments deficit with Comecon
countries
(see Foreign Economic Assistance
, this ch.). In 1987 Le
Hoang, deputy director of the State Bank of Vietnam, told a
Western correspondent that the country owed between US$5.5 and
US$6 billion to Comecon member countries. Hoang stated that
Vietnam's debts (both official and private) to hard-currency
countries were about US$1 billion.
Creditors in convertible-currency areas included
international organizations such as the IMF and the Asian
Development Bank; national creditors such as Belgium, Denmark,
France, India, Japan, and the Netherlands; and private creditors
in numerous Western countries. In January 1985, the IMF suspended
further credit when Vietnam failed to meet a repayment schedule
on the amount owed to the fund. Talks to reschedule this
obligation again failed in 1987, making Vietnam ineligible for
fresh funding. In 1987 Vietnam owed the fund some US$90 million.
Its foreign exchange reserves in 1985 had been estimated at less
than US$20 million.
Data as of December 1987
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