* Trade deficit expected to grow 9.8 pct from 2009
* Foreign debt seen rising to 42.2 pct of GDP
(Adds debt projections, context and bullet points)
By John Ruwitch and Ho Binh Minh
HANOI, Oct 20 Vietnam on Wednesday projected a
stubbornly wide $13.5 billion trade deficit this year despite a
rise in exports of 19.1 percent, three times the initial
target, adding to pressure on the authorities to devalue the
Prime Minister Nguyen Tan Dung, reading a report to the
opening session of the National Assembly, also forecast
economic growth of 7.2 percent in the fourth quarter from a
year before, after 7.16 percent in the third quarter.
The government report seen by Reuters forecast gross
domestic product would rise next year by between 7 percent and
7.5 percent, following a projected 6.7 percent this year.
This year's projected trade deficit would be up 9.8 percent
from the $12.3 billion gap in 2009. A Reuters poll of 12
economists this month had forecast $12.2 billion for this year.
Vietnam's large trade and budget deficits, plus low foreign
exchange reserves, make it vulnerable to another devaluation in
the dong VND=, which is pegged to the U.S. dollar.
The central bank devalued the currency on Aug. 17 for the
third time since November, cutting the reference rate by 2
percent in what it said was a bid to control the trade deficit.
Speculation of another devaluation has been putting
pressure on the currency, making businesses reluctant to sell
State Bank of Vietnam Governor Nguyen Van Giau was quoted
on Tuesday as saying the central bank had no plans to adjust
the rate even though the dong has been dropping on the
unofficial market, according to a state-run newspaper.
Inflation would be at around 7 percent in 2011, the
government report said. The government is aiming for 8 percent
With imports in 2010 seen climbing 16.5 percent, the trade
deficit would stay below 20 percent of the country's export
revenue, it said.
The government targets for 2011 need approval by
parliament, which had approved a target for exports to grow 6
percent this year.
Dung said he expected foreign debt this year to rise to
42.2 percent of gross domestic product from 30 percent last
year. Government debt would be 44.5 percent of GDP while public
debt would hit 56.7 percent of GDP, he said in the report.
Vietnam's credit growth is expected to be 25 percent this
year and money supply (M2) would grow 20 percent from 2009,
fuelling economic growth of 6.7 percent for the whole year,
He estimated the bad debt ratio for the whole of 2010 would
be kept below 3 percent of loans, against 2.03 percent at the
end of 2009.
The annual trade deficit for 2011 would be kept at less
than 20 percent of exports, while the budget deficit would be
5.5 percent of GDP, Dung said in televised remarks.
Vietnam's investment for development is projected to be
equivalent to 40 percent of GDP in 2011, slightly lower than
this year when investment would jump 12.9 percent from last
year and make up 41 percent of GDP.
(Editing by Alan Raybould)