Decree No. 04/2017/ND-CP On granting and managing government guarantees

DECREE

On the issuance and management of government guarantees

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Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Law on State Budget Management dated December 16, 2002;

Pursuant to the Investment Law dated November 26, 2014;

Pursuant to the Law on Public Investment dated June 18, 2014;

Based on the Law on Credit Institutions dated June 16, 2010;

Pursuant to the Law on Public Debt Management dated June 17, 2009;

Upon the proposal of the Minister of Finance, the Government promulgates this Decree on the issuance and management of government guarantees.

 

PART I

GENERAL PROVISIONS

 

Article 1.                        Scope of application

1. This Decree stipulates the appraisal, approval, and issuance of government guarantees; the management of government guarantees; the responsibilities and obligations of agencies, organizations, and individuals involved in the issuance and management of government guarantees for domestic and foreign loans, and domestic and international bond issuances.

2. The issuance and management of government guarantees for domestic bond issuances by policy banks according to annual plans assigned by competent authorities shall be guided by separate documents.

Article 2.                        APPLICATION OBJECTS

The objects subject to this Decree include:

1. The guaranteed party.

2. The guarantor.

3. The beneficiary of the guarantee.

4. Agencies, organizations, and individuals related to the issuance and management of government guarantees.

Article 3.                        Definitions

In addition to the terms defined in the Law on Public Debt Management, the following terms in this Decree shall be understood as follows:

1. State-targeted credit program means a lending program by credit institutions for important national projects approved by authorized bodies.

2. Litigation file receiving representative means the representative body of Vietnam abroad or an organization authorized to receive and confirm receipt of litigation files related to government guarantees and transfer all such files to the Ministry of Finance.

3. Government guarantee limit includes the guarantee limit for domestic and foreign loans and bond issuances. The government guarantee limit for a year is the ceiling amount of net borrowing expected from loans and bond issuances guaranteed by the Government that year (the expected loan drawdown amount for the year minus the principal repayment amount for the year), approved by the Prime Minister.

4. Syndicated loan means a loan provided by two or more financial or credit institutions. A syndicated loan between domestic and foreign financial or credit institutions shall be considered a foreign loan if the total amount lent by foreign institutions constitutes 51% or more of the loan value and the corresponding regulations on the issuance and management of government guarantees for foreign loans guaranteed by the Government shall apply.

5. Serving bank means the bank where the guaranteed party opens a Project Account and performs tasks related to monitoring loan drawdowns, debt repayments, and collateral for government-guaranteed loan projects.

6. Payment obligation means the amounts payable including principal, interest, late payment interest, fees and expenses, and loss compensation (if any) as specified in the loan agreement or bond issuance agreement and accepted in the Guarantee Letter.

7. Guarantor means the Government, represented officially by the Ministry of Finance or referred to as the guarantee issuing agency under Clause 6, Article 10 and Clause 1, Article 36 of the Law on Public Debt Management.

8. Beneficiary of the guarantee means the person who owns part or all of the loan or issued bonds guaranteed by the Government. The beneficiary of the guarantee includes lenders, bond purchasers, and those who legally assign or transfer rights from lenders or bond purchasers and are collectively called the Lender in loan agreements and bond issuance agreements.

9. Assignee or transferee of the guaranteed party means the person who receives all or part of the rights and obligations of the guaranteed party in the transaction of transferring guaranteed loans or bond issuances, approved by the guarantor.

10. Project Account means the account opened by the guaranteed party at the serving bank and registered in writing with the State Bank of Vietnam and the Ministry of Finance. The Project Account is used to conduct transactions related to government-guaranteed loans and bond issuances, capital contributions, revenues, other income, and debt repayment of programs and projects from the date the Government issues the Guarantee Letter.

Article 4.                        Forms of Guarantee Documents

1. Government guarantees shall be implemented in the form of guarantee letters, guarantee contracts, or guarantee documents (hereinafter collectively referred to as "Guarantee Letters").

2. The Government shall only issue Guarantee Letters, not re-guarantee letters.

Article 5.    Objectives, Programs, Projects Eligible for Consideration of Government Guarantees

1. The entities eligible for government guarantees shall comply with the provisions set forth in Article 32 of the Law on Public Debt Management and meet the specific requirements stipulated in this Decree.
2. The Prime Minister shall specify in detail the programs and projects prioritized for consideration of government guarantees during each period in accordance with the provisions of Article 33 of the Law on Public Debt Management.

Article 6.                       

Preparation of Medium-Term Plan for Requesting Government Guarantees 1. The entities specified in Clause 1 of Article 5 of this Decree shall, based on their borrowing needs and bond issuance requirements, prepare a medium-term plan to request government guarantees for a three-year period starting from the year of plan preparation and the following two years, on a rolling basis, and submit it to the Ministry of Finance in January of the year of plan preparation.

2. The medium-term plan to request government guarantees prepared by the entities specified in Clause 1 of this Article shall include the following main contents:

a) Name of the program or project.

b) Borrowing amount for each project.

c) Form of borrowing (loan, bond issuance, domestic or foreign).

d) Anticipated borrowing and implementation periods.
3. Based on the medium-term plans to request government guarantees submitted by the entities specified in Clauses 1 and 2 of this Article and the public debt monitoring indicators and national foreign debt, the Ministry of Finance shall prepare a medium-term plan for issuing government guarantees and incorporate it into the medium-term public debt management program of the Government.

Article 7.                       

Annual Plan for Issuing Government Guarantees

1. Entities that have been approved by the competent authority to issue a resolution on government guarantees in accordance with Article 12 of this Decree and have a need to request government guarantees in the planning year shall submit a registration document to the Ministry of Finance (a copy sent to the State Bank of Vietnam for foreign loans and bond issuances) no later than October of the preceding year. 2. The annual plan to request government guarantees shall include the following main contents:

a) Name of the investment program or project.

b) Anticipated borrowing amount or bond issuance amount proposed for government guarantee.

c) Reference number and date of the document approving the resolution on government guarantee.

d) Anticipated drawdown amount in the planning year if government guarantee is issued.

3. In case there is a need to adjust the registered plan for requesting government guarantees, the entity shall submit a document to the Ministry of Finance when such adjustment occurs during the planning year and clearly state the reasons for the adjustment.

d) The expected amount of capital withdrawal in the planned year if guaranteed by the government.
2.

3. In case there is a need to adjust the registered plan for government guarantee, the entity requiring such adjustment must submit a written request to the Ministry of Finance during the planning year, clearly stating the reasons for the adjustment.

Article 8.                        Government Guarantee Limit

1. The limit for government guarantees on loans and bond issuances falls within the government's borrowing and repayment plan. Based on the proposed medium-term guarantee issuance plan, the approved guarantee issuance policy, and the registered annual guarantee issuance plan, the Ministry of Finance shall develop the annual government guarantee issuance plan to be submitted to the Prime Minister for approval in accordance with the Public Debt Management Law.

2. Within the annual approved guarantee limit, the Ministry of Finance shall issue government guarantees for each loan or bond issuance series based on the Prime Minister's decision.

3. In cases where the annual approved government guarantee limit has been exhausted but there are still requests for government guarantees for urgent and particularly important projects and works for national socio-economic development that have been decided by the National Assembly and the Government to be financed through government-guaranteed loans within the planned year, the Ministry of Finance shall have the responsibility to report to the Prime Minister to adjust the government guarantee limit for that year while ensuring public debt safety requirements.

Article 9.                        Conditions for Issuing Government Guarantees

In addition to the conditions stipulated in Article 34 of the Public Debt Management Law, the conditions for issuing government guarantees are specifically defined for certain cases as follows:

1. Conditions for obtaining government guarantees for investment programs and projects:

a) For borrowers and bond issuers:

- Borrowers and bond issuers must be legally established enterprises with corporate status in Vietnam and have at least three years of operation.

- Enterprises implementing investment projects with government-guaranteed loans must have a minimum equity participation rate of 20% of the total project investment capital structure. Equity must be allocated according to the project implementation schedule.

For cases where the Prime Minister considers exempting from applying this condition under point e, Clause 2, Article 34 of the Public Debt Management Law, the investor must still ensure a minimum equity ratio of 15% of the total investment cost in the project's capital structure.

- Enterprises implementing investment programs and projects must have sound financial conditions, without accumulated losses (except for losses due to state policies), and ensure that the debt-to-equity ratio does not exceed three times according to the most recent audited financial report at the time of assessing the government guarantee issuance.

- Commitment from the parent company (in the form of a parent company - subsidiary enterprise), group of shareholders, or individuals or organizations contributing more than 65% of the enterprise's investment capital to ensure repayment on behalf of the enterprise in case of difficulty in repaying debts when the enterprise is guaranteed.

b) For investment programs and projects:

- Approved by competent authorities for the guarantee issuance policy
2.

- Registered the guarantee issuance plan for the loan or bond issuance within the planned year as stipulated in Article 7 of this Decree and within the government guarantee limit approved by the Prime Minister as stipulated in Article 8 of this Decree.

- Have a feasible financial plan for the project, with an average debt service ratio of at least 0.9 in the first five years of the project for projects with product take-or-pay contracts or a ratio of 1 for other projects.

- For projects under point c, Clause 2, Article 10 of this Decree, the investor must purchase insurance to cover 100% of the obligation to repay debt in case the enterprise does not have sufficient funds to repay from operating the project.

2. Conditions for obtaining government guarantees for state-targeted credit programs:

a) Borrowers and bond issuers must be legally established credit institutions in Vietnam with corporate status as prescribed by Vietnamese law.

b) The loan or bond issuance proceeds must be used to implement state-targeted credit programs consistent with the charter and operations of the credit institution.

c) Approved by competent authorities for the guarantee issuance policy
2.

d) The loan or bond issuance requesting a guarantee must be registered in the annual guarantee issuance plan as stipulated in Article 7 of this Decree and within the government guarantee limit approved by the Prime Minister as stipulated in Article 8 of this Decree.

đ) Credit institutions must meet the prescribed safety ratios in their operations as stipulated by the State Bank of Vietnam and not be subject to special supervision.

Article 10.                    Government Guarantee Amount

1. The government guarantee amount for the principal value of loans and bond issuances for investment programs and projects shall not exceed 70% of the total investment amount of such programs and projects.

2. The government guarantee amount applicable to each specific program or project shall be implemented according to the provisions of Law on Investment No. 67/2014/QH13 dated November 26, 2014 and Law on Public Investment No. 49/2014/QH13 dated June 18, 2014 as follows:

a) For projects approved by the National Assembly or the Government for investment orientation or projects that must be urgently implemented, the guarantee amount is the principal value of loans and bond issuances up to a maximum of 70% of the total investment amount as determined in the investment decision.

b) For Group A projects with a total investment amount of 2.3 trillion VND or more, approved by the Prime Minister for investment orientation, the guarantee amount is the principal value of loans and bond issuances up to a maximum of 60% of the total investment amount as determined in the investment decision.

c) For other projects, the guarantee amount is the principal value of loans and bond issuances up to a maximum of 50% of the total investment amount as determined in the investment decision.

Article 11.                    Guarantee Letter

1. The Guarantee Letter is issued and managed by the Ministry of Finance.

2. The Guarantee Letter is issued only once for each loan or bond issuance of a program or project and shall not exceed the total guaranteed amount anticipated for the loan or bond issuance approved by the Prime Minister for that program or project.

3. The mandatory contents of the Guarantee Letter include:

a) Guarantor.

b) Beneficiary.

c) References to relevant commercial contracts and loan agreements.

d) Guaranteed loan amount, type of currency guaranteed.

đ) The commitment of the Ministry of Finance to the Beneficiary regarding the obligations of the Beneficiary and the Ministry of Finance.

e) Rights and responsibilities of the Beneficiary.

g) Validity period and recovery of the Guarantee Letter.

h) Governing law and jurisdiction, place, language used in resolving disputes.

i) Place, date, month, year of issuance of the Guarantee Letter.

4. Other contents of the Guarantee Letter are agreed upon by the parties but shall not contravene Vietnamese laws.

5. The Guarantee Letter becomes effective from the date of issuance until the Beneficiary or Guarantor fulfills the guaranteed payment obligations to the Beneficiary under the conditions stipulated in the loan agreement or the terms and conditions of the guaranteed bonds issued by the Government.

 

Chapter II

REVIEW, APPROVAL AND ISSUANCE OF GOVERNMENT GUARANTEES

 

Section 1

REVIEW AND APPROVAL OF GOVERNMENT GUARANTEE POLICY

 

 

Article 12.                    Approval of Government Guarantee Policy

1. The Government approves the policy of issuing government guarantees for:

a) Investment programs and projects within the authority of the National Assembly or the Government to decide on investment orientation according to the Law on Investment and the Law on Public Investment.

b) Projects not using state budget funds with a proposed loan or bond issuance amount for government guarantee of 300 million USD or more.

c) Projects carried out by enterprises with foreign investors' capital contribution or economic organizations with foreign investment exceeding 30% of the charter capital.

2. The Prime Minister approves the policy of issuing government guarantees for programs and projects outside those specified in Clause 1 of this Article.

3. Within three years from the date of approval of the government guarantee policy, the entity approved is responsible for completing the application for government guarantee and submitting it to the Ministry of Finance. Beyond this period, the government guarantee policy will lose its validity for consideration of the guarantee.

4. Approval of the government guarantee policy serves as the basis for enterprises and credit institutions to negotiate with lenders, but does not guarantee issuance of the government guarantee if they do not meet the conditions stipulated in Articles 9, 15, and 20 of this Decree at the time of considering the guarantee issuance.

Article 13. Documents for Requesting Approval of Government Guarantee Proposal

A business or credit institution requesting approval of a government guarantee proposal shall submit to the Ministry of Finance directly or through postal services the following documents:

1. The document requesting approval of the government guarantee proposal (original).

2. Decision on establishment of the business or credit institution or Business Registration Certificate of the enterprise being the program/project owner (certified copy).

3. Investment-related documents (certified copy):

a) Decision on investment orientation accompanied by Preliminary Feasibility Study Report or Investment Decision accompanied by Detailed Feasibility Study Report of the project approved by competent authority; or

b) Investment Registration Certificate (if available); or

c) Decision approving targeted credit programs of the State for credit institutions.

4. Report of the business or credit institution requesting approval of the government guarantee proposal regarding operational status and planned borrowing projects (original), including the following contents:

a) General operating situation of the business (including list of shareholders and individuals contributing more than 5% of the charter capital of the business), credit institution and activities of the business and credit institution in the field of the proposed guaranteed program/project.

b) Sources of funding for the program/project (specifying the specific amount of each source of funding: own capital, borrowed funds or bond issuance and proportion of each source); progress of contribution by the owner.

c) Purpose of borrowing, issuing bonds (clarify whether borrowing serves the direct production and business operations of the borrower or is transferred to subsidiary/joint venture companies for use of the loan).

d) Expected borrowing period, bond issuance period (repayment start date, interest payment period), withdrawal period and implementation of the project.

đ) Plan for using and managing the loan and bond issuance proceeds.

e) Plan for arranging sources of funds to repay principal, interest, and fees when due, including sources from project cash flow and reserve repayment sources (if any).

g) Collateral plan for the loan and bond issuance guaranteed by the Government.

5. Plan for arranging the owner's equity within the total investment amount of the project, annual equity arrangement plan during the construction period, and evidence proving the ability to arrange owner's equity.

6. Financial statements of the three most recent consecutive years prior to the submission of the appraisal proposal for government guarantee approval (certified copy) of:

a) The business or credit institution requesting approval of the guarantee proposal.
b) Parent company of the business requesting the guarantee or of the shareholders, contributors (excluding individual shareholders, contributors) holding at least 5% of the business's equity in cases where the business is newly established (less than three years of operation) or has not generated revenue from production and business activities. In case the application is submitted in the second half of the fiscal year, the financial report for the first six months must be supplemented.

b) The parent company of the enterprise requesting the guarantee or shareholders, contributing members (excluding individual shareholders, contributing members) holding at least 5% of the enterprise's equity in cases where the enterprise is newly established (less than three years of operation) or has not generated revenue from production and business activities. If the application is submitted in the second half of the fiscal year, a financial report for the first six months of the year must be included.

Article 14. Procedure for Reviewing and Approving Government Guarantees 1. The Ministry of Finance shall review the application file for approval of the government guarantee proposal after the enterprise has provided all required documents as stipulated in Article 13 of this Decree and before negotiating the loan agreement for which the government guarantee is requested.

2. Within thirty days from the date of receipt of the complete application file for reviewing and approving the government guarantee proposal from the borrower and the issuer of bonds as prescribed in this Decree, the Ministry of Finance shall examine the file, including the following main contents:

a) The validity of the submitted documents.

b) Compliance with the conditions regarding the objects, programs, and projects as specified in Articles 32 and 33 of the Public Debt Management Law and the conditions for each type of loan under this Decree.

c) Compliance with the conditions for obtaining a government guarantee for the borrower and the issuer of bonds as stipulated in Clause 2, Article 34 of the Public Debt Management Law and the conditions concerning the loan and bond issuance as specified in Clause 3, Article 34 of the Public Debt Management Law.

In case the application file does not meet the conditions prescribed in this clause, the Ministry of Finance shall notify the borrower and the issuer of bonds.
3. If additional information is needed during the assessment process, the Ministry of Finance shall seek opinions from ministries, ministerial-level agencies, and sector management agencies on issues related to the management areas concerning the loan program and project requesting a government guarantee.

4. The Ministry of Finance shall report to the Government or the Prime Minister (depending on their authority to decide on investment policies) on the results of the assessment of the government guarantee proposal and propose approval or rejection of the government guarantee proposal.
5. The Government or the Prime Minister shall issue a document to approve or reject the government guarantee proposal according to the authority prescribed in Clause 1 and Clause 2, Article 12 of this Decree and send it to relevant agencies.

ISSUING GOVERNMENT GUARANTEES FOR DOMESTIC AND FOREIGN LOANS

Article 15. Application File for Approval of Government Guarantee for Loans

In addition to the files already submitted in accordance with Article 13 of this Decree, the borrower requesting approval of a government guarantee for a loan shall submit the following additional documents directly to the Ministry of Finance or through postal services:

 

Section 2

1. A letter from the lender requesting a government-guaranteed loan sent to the borrower (original).

2. A letter from the enterprise or credit organization requesting a government guarantee, accompanied by a proposal for the bank serving the government-guaranteed loan (original).

 

3. Any documents specified in Article 13 if there have been any changes compared to previously submitted documents. 4. An approved feasibility study report (in cases where only a preliminary feasibility study report was submitted for assessing the guarantee proposal) (certified copy).

5. An approval decision on the guarantee proposal from the competent authority (certified copy).

6. A loan plan (original), which must be updated at least six months before submitting the application for approval of the government guarantee, as detailed in Clause 4, Article 13 of this Decree, and supplemented with the following contents:

a) Summary of the conditions of the loan being proposed for a government guarantee and other loans (if any).

b) Overall withdrawal plan by quarter for the loan.

7. An approval decision on the loan plan guaranteed by the Government issued by the state capital representative agency at that organization if it is an enterprise, credit organization, or policy bank with at least 50% state share (original).

8. A draft final loan agreement signed by the parties or a signed loan agreement containing provisions on the requirement for a government guarantee (certified copy).

9. Financial statements of the three most recent consecutive years prior to the submission of the guarantee assessment application, audited in accordance with Clause 5.

a) A summary of the conditions of the loan being requested for guarantee and other loans (if any).

b) An overall capital withdrawal plan by quarter for the loan.

7. The approval document for the loan project guaranteed by the government issued by the agency representing the state capital owner in that organization, if it is an enterprise, credit institution, policy bank with at least 50% state share.
(original).

8. The draft final loan agreement signed by the parties or the loan agreement already signed, containing provisions on the requirement for government guarantee (certified copy).

9. Audited financial statements of the three most recent consecutive years prior to the submission of the application for guarantee assessment, in accordance with Clause 5.
Article 13 of this Decree (certified true copy). Financial report for the first six months of the year in cases where the request for guarantee is made during the second half of the fiscal year.

10. Detailed report from the Credit Information Center of the State Bank of Vietnam on the credit situation of the Borrower (original).

11. Commitment document as stipulated in Appendix II of this Decree (original), accompanied by confirmation from an authorized representative of the parent company or individual or organization contributing 65% or more of the subscribed capital regarding the commitment to repay the debt on behalf of the Borrower in case the Borrower encounters difficulties in repaying the debt.

12. Commitment document from organizations and individuals holding shares or contributions of 5% or more of the subscribed capital regarding their joint holding of at least 65% of the subscribed capital throughout the duration of the effective guarantee period, accompanied by a list of such shareholders and individuals (for joint stock companies).

13. Additional information arising during the process of evaluating the issuance of guarantees for project investment loans (approved basic design, product take-off contract, technical description, equipment of the investment project).

14. Annual capital allocation plan according to the documentation proving the ability to arrange equity capital (if available).

The Borrower is responsible for submitting to the Ministry of Finance all documents specified in Article 13 and materials specified in this Article before the evaluation for issuing guarantees.

Article 16. Government Guarantee Evaluation for Loans

1. Within thirty days from the date of receipt of complete loan guarantee application documents as prescribed in this Decree from the Borrower, the Ministry of Finance will evaluate the application for government loan guarantees and report to the Prime Minister the results of the evaluation with the following main contents:

b) Compliance with the conditions regarding the objects, programs, and projects as specified in Articles 32 and 33 of the Public Debt Management Law and the conditions for each type of loan under this Decree.

b) Assessment of the enterprise, financial credit institution, program, project, and loan requesting government guarantee based on the criteria and conditions stipulated in Articles 32, 33, and 34 of the Public Debt Management Law and the conditions for the loan.

c) Assessment of the financial situation of the enterprise and financial credit institution borrowing funds guaranteed by the Government.

d) Assessment of the financial plan of the program and project using borrowed funds and the ability of the enterprise to repay debts, except in cases where the competent authority permits not to re-evaluate the financial plan and uses the assessment results of the program and project already approved by the competent authority. The method of assessment is detailed in Appendix I of this Decree.

đ) Assessment of the suitability (type, nature, value...) of collateral for the loan and bond issuance guaranteed by the Government.

e) Assessment of risks related to the program and project associated with the loan guaranteed by the Government.

g) Total amount of loans and number of projects that the Government has guaranteed which the enterprise and financial institution have implemented up to the time of evaluating the issuance of guarantees; outstanding loan balance guaranteed by the Government of the enterprise and financial institution at the time of evaluating the issuance of guarantees.

h) Proposed guarantee fee rate.

i) Recommendations and suggestions.

2. In cases where the application does not meet the conditions stipulated in paragraph 1 of this Article, the Ministry of Finance shall notify the Borrower within five working days after completing the evaluation.

ISSUING GOVERNMENT GUARANTEES FOR DOMESTIC AND FOREIGN LOANS

Article 17. Government Guarantee Decision for Loan  Decision on Government Guarantee for the Loan

1. The Ministry of Finance shall submit to the Prime Minister the content of the Guarantee Letter along with a report on the results of the review for issuing the government guarantee.

2. The decision of the Prime Minister to issue a government guarantee for a loan shall include the following contents:

a) Approving the content of the Guarantee Letter and instructing the Ministry of Finance to issue the Guarantee Letter.

b) Approving the fee rate for the government guarantee applicable to the loan.

c) Instructing the Ministry of Justice to provide legal opinions according to the law (if necessary).

d) Instructing the Ministry of Foreign Affairs to coordinate with the Ministry of Finance to designate a suitable representative office of Vietnam abroad to receive litigation files as stipulated in the Guarantee Letter.

đ) Approving another organization to act as the litigation file receiver as stipulated in the Guarantee Letter.

e) Other contents.

Article 18. Issuing the Guarantee Letter for Loans  Issuing a Letter of Guarantee for the Loan

1. The Guarantee Letter shall be issued by the Ministry of Finance based on the Prime Minister's decision approving the issuance of a government guarantee for the loan, after the guaranteed party has completed the following procedures:

a) Signing with the Ministry of Finance a collateral agreement for the loan guaranteed by the government.

b) Opening a Project Account at the serving bank; notifying the Ministry of Finance in writing about the account number of the Project Account and all existing deposit accounts at credit institutions, accompanied by confirmation from the credit institution where the account was opened (original copy) or the Project Account opening contract.

c) Submitting to the Ministry of Finance the loan contract that has been officially signed by all parties (certified copy).

2. The Guarantee Letter shall be issued within seven working days from the date of completion of the procedures specified in Clause 1 of this Article:

a) For foreign loans, the Guarantee Letter shall be made in four original copies, including: the Ministry of Finance retains one copy, the guaranteed party retains one copy, the Ministry of Justice retains one copy, and one copy is transferred to the lender or the lender's representative.

b) For domestic loans, the Guarantee Letter shall be made in six original copies, including: the Ministry of Finance retains two copies, the guaranteed party retains one copy, one copy is transferred to the lender, and two copies are sent to relevant agencies.

3. The Ministry of Finance shall decide to issue additional original copies for related agencies not covered under Clause 2 of this Article on a case-by-case basis if necessary.

Article 19. Procedures Related to the Effectiveness of Foreign Loans Guaranteed by the Government  Procedures related to the validity of foreign loans guaranteed by the Government

1. The guaranteed party is responsible for completing the procedures stipulated in the Loan Agreement so that the Guarantee Letter and the Loan Agreement become fully effective.

2. The guaranteed party is responsible for working with the Ministry of Justice to obtain a legal opinion on the Guarantee Letter for foreign loans guaranteed by the government.

3. After the Guarantee Letter is issued, the guaranteed party is responsible for registering the foreign loan with the State Bank of Vietnam according to Clause 1 of Article 35 of the Public Debt Management Law and according to the State Bank of Vietnam's regulations on managing foreign borrowing and repayment.

4. In cases where litigation procedures are stipulated in the foreign loan agreement and the Guarantee Letter requires a litigation file receiver:

a) The guaranteed party proposes to the Ministry of Finance regarding the organization selected to act as the litigation file receiver for the borrower and guarantor according to the loan agreement requirements, and seeks the Ministry of Finance and Ministry of Foreign Affairs' opinions during negotiations.

b) After signing the Loan Agreement and issuing the government guarantee, the guaranteed party sends the power of attorney sample of the borrower and guarantor (if any) to the selected organization to confirm their agreement, which is then sent to the guaranteed party to forward to the guarantor and copied to the Ministry of Finance.

 

Section 3

ISSUANCE OF GOVERNMENT GUARANTEES FOR DOMESTIC AND INTERNATIONAL BOND ISSUES BY ENTERPRISES

 

Article 20. Documents for requesting government guarantee for bond issuance

In addition to the documents submitted in accordance with Article 13 of this Decree, the issuer of bonds requesting approval for a government guarantee shall submit to the Ministry of Finance the following additional documents:

1. Any documents stipulated in Article 13 if there have been any changes from the previously submitted documents.

2. The request for a government guarantee from the issuer accompanied by the proposal for the bank serving the bond issuance guaranteed by the Government (original).

3. Feasibility study report of the Project already approved by the competent authority (in cases where only a preliminary feasibility study report was submitted to the Ministry of Finance when assessing the guarantee policy) (certified copy) (if applicable).

4. Approval document for the guarantee policy from the competent authority (certified copy).

5. Bond issuance plan (original), which must be updated at least six months before submitting the request for approval of the government guarantee according to the contents specified in Clause 4 of Article 13 of this Decree, while supplementing:

a) Plan and timing for issuing bonds and implementation and disbursement plans for the program and project (original or certified copy).

b) Total issuance volume divided by bond tenor and issuance timing based on the progress of implementation and disbursement of the program and project.
project.

c) Expected currency type and issuance market, interest rate, and issuance method (if applicable).

d) Expected selection method for the organization or consortium providing the bond issuance guarantee, domestic legal advisors, international legal advisors, and related agents (if applicable).

If the planned issuance is expected to be divided into multiple issuances over several years, the issuance plan must be specifically developed for each year.
annually.

6. Approval document for the bond issuance plan guaranteed by the Government from the state capital ownership representative agency at that organization if it is a business entity, credit institution, or policy bank with 100% state contribution (original); or the opinion of the state capital ownership representative agency in the case of a business entity or credit institution with less than 100% state contribution.
less than 100%.

7. Financial statements of the three most recent consecutive years prior to the time of evaluating the government guarantee, audited in accordance with Clause 5 of Article 13 of this Decree (certified copy). In cases where the application for bond issuance guaranteed by the Government is submitted before April 1st each year, financial statements as prescribed in point b, Clause 1 of Article 13 of Decree No. 90/2011/NĐ-CP on corporate bond issuance and relevant amended, supplemented, or replaced documents must be included.

8. Detailed report of the Credit Information Center of the State Bank of Vietnam on the credit situation of the issuer (original).

9. Commitment document as prescribed in Appendix II of this Decree (original) accompanied by confirmation from the authorized representative of the parent company or organizations and individuals contributing 65% or more of the registered capital regarding the assurance of repayment on behalf of the guarantor in case the guaranteed party encounters difficulties in repayment.

10. Commitment document of organizations and individuals holding 5% or more of the actual contributed registered capital about jointly holding at least 65% of the actual contributed registered capital throughout the effective period of the guarantee (along with a list of shareholders and individuals mentioned above for joint-stock companies).

11. Additional information arising during the evaluation process for the loan guarantee for the project investment (approved basic design, product take-or-pay contract, technical description and equipment of the investment project).

12. Annual capital allocation plan for the investment project along with documentation proving the ability to arrange equity capital (if applicable).

The issuer has the responsibility to submit to the Ministry of Finance all documents specified in Article 13 and the materials specified herein before the evaluation of the guarantee.

Article 21. Government Guarantee Approval and Issuance Government Guarantee Approval and Issuance

1. The Ministry of Finance shall conduct an assessment of the application for government guarantee approval for domestic and international bond issuances according to the contents and procedures applicable to domestic and foreign loans guaranteed by the government as stipulated in Article 16 of this Decree. The Ministry of Finance shall submit to the Prime Minister the contents of the Guarantee Letter along with the report on the results of the government guarantee approval assessment.

2. After the Prime Minister issues the decision approving the government guarantee according to the contents prescribed in Article 17 of this Decree and approves the guarantee limit, the Ministry of Finance shall notify in writing the issuer subject to organize the issuance of bonds according to the project already approved by the competent authority.

3. Enterprises shall organize the issuance of bonds in accordance with the laws on corporate bond issuance. In cases where enterprises issue bonds to the public, they must comply with the provisions of the securities law.
4. At the end of each bond issuance period, the issuer subject must report to the Ministry of Finance on the issuance results to complete the procedures for confirming the actual guarantee obligation in accordance with the laws on government guarantee issuance and management.

Article 22. Issuance of Guarantee Letters for Domestic and International Bond Issuances

Issuance of Guarantee Letters for Domestic and International Bond Issuances 1. The Guarantee Letter shall be issued by the Ministry of Finance based on the Prime Minister's Decision approving the government guarantee for the bond issuance after the Guaranteed Party has completed the following procedures:

a) Signing with the Ministry of Finance a Collateral Contract for the bond issuance guaranteed by the Government in accordance with Article 32 of this Decree.

b) Opening a Project Account at the servicing bank, notifying the account number of the Project Account and all existing deposit accounts at credit institutions, accompanied by confirmation from the credit institution where the account was opened (if there is a specific project using borrowed funds).
3. Build-Operate-Transfer Contract (hereinafter referred to as BOT Contract) is a contract signed between the competent state agency and the investor, project enterprise to construct infrastructure works; after completion of the works, the investor, project enterprise has the right to operate the works for a certain period of time; at the end of the period, the investor, project enterprise transfers the works to the competent state agency.

c) Submitting to the Ministry of Finance a copy of the Bond Purchase and Sale Contract signed by both parties (certified copy) (if any).

2. The Guarantee Letter shall be issued within five working days from the date of completion of the procedures under Clause 1 of this Article:

a) For international bond issuance, four original copies shall be prepared, of which: the Ministry of Finance retains one copy, the Guaranteed Party retains one copy, the Ministry of Justice retains one copy, and one copy is transferred to the financial agent.

b) For domestic bond issuance, six original copies shall be prepared, of which: the Ministry of Finance retains two copies, the Guaranteed Party retains one copy, one copy is transferred to the issuing agent, and two copies are sent to relevant agencies.

3. The Ministry of Finance may decide to issue additional original copies for related agencies not specified in Clause 2 of this Article if necessary in specific cases.

Article 23. Procedures Related to the Effectiveness of Internationally Issued Bonds Guaranteed by the Government

Procedures Related to the Effectiveness of Internationally Issued Bonds Guaranteed by the Government 1. The Guaranteed Party is responsible for completing the procedures stipulated in the International Bond Issuance Agreement to ensure that the Guarantee Letter and the International Bond Issuance Agreement are fully effective.

2. The Guaranteed Party is responsible for working with the Ministry of Justice to obtain a legal opinion on the Guarantee Letter for internationally issued bonds guaranteed by the Government.

3. After the issuance of the Guarantee Letter, the Guaranteed Party is responsible for registering the issuance of international bonds with the State Bank of Vietnam in accordance with Clause 1 of Article 35 of the Law on Public Debt Management and the regulations of the State Bank of Vietnam on foreign borrowing and repayment by enterprises.

4. If the litigation procedures are stipulated in the International Bond Issuance Agreement and the Guarantee Letter require a Litigation File Receiver:

a) The Guaranteed Party shall propose to the Ministry of Finance the organization selected to act as the Litigation File Receiver for the borrower and guarantor according to the requirements of the Bond Issuance Agreement and seek the opinions of the Ministry of Finance and the Ministry of Foreign Affairs during negotiations.

b) After the Bond Issuance Agreement is signed and the Guarantee Letter is issued, the Guaranteed Party shall send the model power of attorney of the borrower and guarantor (if any) to the selected organization to confirm agreement, send it to the Guaranteed Party to forward to the beneficiary and send a copy to the Ministry of Finance.

GOVERNMENT GUARANTEE MANAGEMENT

 

Chapter III

MANAGEMENT OF LOANS GUARANTEED BY THE GOVERNMENT

 

Section 1

MANAGEMENT OF LOANS GUARANTEED BY THE GOVERNMENT

Article 24. Banking service BASED

1. The banking service provider is a mandatory requirement for investment projects, selected and proposed by the beneficiary in the application for government guarantee.

2. The banking service provider must be a commercial bank established and operating under the Law on Credit Institutions of Vietnam and meeting the following conditions:
matters as follows:

a) Included in the list of commercial banks qualified to serve ODA and preferential loan projects as published by the State Bank of Vietnam; or

b) Possessing a credit rating issued by one of the three international credit rating organizations (Moody's, Standard & Poor's, Fitch) that is equal to or one notch lower than the national credit rating.

3. Responsibilities of the Banking Service Provider:

a) Carry out tasks related to payment, monitoring, and supervision of the Project Account, withdrawal of funds, repayment of loans, collateral for loans, issuance of guaranteed bonds, and bear responsibility for the accuracy of confirmation reports issued by the banking service provider.

b) Conduct control over the withdrawal documentation of the beneficiary in accordance with the commercial contract and loan agreement; send confirmation of compliance to the beneficiary and the Ministry of Finance within a maximum of five days from receipt of the disbursement application from the beneficiary, before the beneficiary submits the withdrawal application to the lender.

c) Report to the Ministry of Finance on the reasons and solutions for handling cases where withdrawal documentation does not comply.

d) Monitor the balance of the Project Account and report to the Ministry of Finance semi-annually about the fulfillment of commitments by the beneficiary or immediately if the beneficiary fails to fulfill commitments; carry out the deduction from the Project Account at the request of the Ministry of Finance to repay debts when the beneficiary fails to fully meet their repayment obligations.

e) Be paid service fees by the beneficiary according to the regulations of the banking service provider and the agreement between both parties.

4. Procedures and formalities for approving the Banking Service Provider:

a) After obtaining approval from the competent authority for government guarantee, the beneficiary registers the banking service provider with the Ministry of Finance.

The registration documents include:

- A document proposing the selection of the banking service provider by the beneficiary (original);

- A contract between the beneficiary and the banking service provider, clearly defining the responsibilities and obligations of the parties involved (consistent with the provisions regarding the responsibilities of the beneficiary and the banking service provider in this Decree) (original or certified copy);

- Documentation proving that the banking service provider meets the conditions stipulated in Clause 2 of this Article (officially published documents or certified copies).
certified).

b) The Ministry of Finance issues a written opinion to approve or reject (with clear reasons) the proposal for the banking service provider by the beneficiary within seven working days.

In case of rejection, the beneficiary is responsible for selecting another banking service provider meeting the conditions stipulated in Clause 2 of this Article and proposing it to the Ministry of Finance for consideration and approval.

c) If the beneficiary cannot select a banking service provider, the Ministry of Finance will designate a banking service provider after consulting with the beneficiary.

Article 25. Project Account  Project Account

1. The guaranteed party implementing a government-guaranteed investment project shall be responsible for opening a Project Account at the serving bank, except for organizations borrowing under a state-targeted credit program that are guaranteed by the government.

2. The Project Account reflects loan activities, repayment (principal, interest, fees); related income and expenditures of the project and other legitimate sources of funds of the guaranteed party to ensure full payment of debt obligations arising.
arising.

3. In case of changing or re-registering the Project Account, the guaranteed party shall be responsible for reporting the reasons in writing to the Ministry of Finance.

Article 26. Provisions on Withdrawal of Guaranteed Loans and Issued Bonds  Regulations on withdrawing loans, issuing bonds guaranteed by the Government

1. The guaranteed party shall be responsible for issuing bonds, withdrawing and using guaranteed loans and contributing capital in accordance with the loan proposal and bond issuance proposal approved by the state capital ownership representative body (for state-owned enterprises) and the competent authority, consistent with the implementation schedule and plan registered with the Ministry of Finance, and in compliance with the provisions of the loan agreement and commercial contracts.

2. The lender shall be responsible for reviewing the withdrawal documentation to ensure it aligns with the purpose of the loan before disbursing the government-guaranteed loan and transferring payment according to the borrower's request (the guaranteed party).

3. The serving bank shall be responsible for reviewing the withdrawal documentation to ensure it aligns with the purpose of the loan, the loan agreement, and the commercial contracts signed before the guaranteed party withdraws from the lender’s account, withdraws funds, or transfers payment from the Project Account according to the guaranteed party's request.

Article 27. Provisions on Management of Guaranteed Loans, Issued Bonds, and Other Received Funds  Regulations on managing loans, issuing bonds, and other received funds

1. The guaranteed party shall be responsible for:

a) Managing and utilizing the loan funds, contributed capital, and equity capital in accordance with the stated purposes in the loan proposal and bond issuance proposal.

b) Conducting full and timely accounting in accordance with the law for the loan amounts and bond issuance amounts guaranteed by the government.
guarantee.

c) Prioritizing the use of income from the Project Account to repay the government-guaranteed loan and the loan from the Debt Repayment Reserve Fund for the relevant project (if applicable).

d) Committing to transferring revenues and other lawful income generated from the project to the Project Account immediately upon their occurrence to ensure sufficient and timely repayment of debts.

đ) Committing to maintaining the balance in the Project Account (in original currency or in Vietnamese Dong based on the exchange rate of the serving bank) from the first year of debt repayment obligations to ensure timely repayment of loans. The minimum balance is calculated according to the formula in Appendix IV of this Decree and must be at least equal to the next installment due 15 days prior to the repayment deadline.

e) Unconditionally authorizing the serving bank to instruct financial institutions where the guaranteed party has deposit accounts to deduct funds from those accounts to maintain the balance or collect debts; simultaneously unconditionally authorizing financial institutions where deposit accounts are opened to deduct funds from those accounts to transfer to the serving bank.

g) Reconciling the debt figures periodically every six months and annually with the Ministry of Finance or sending copies of the periodic six-month and annual debt reconciliation statements to the lending bank for government-guaranteed loans and bond issuances for the Ministry of Finance.

2. The Ministry of Finance shall be responsible for:

a) Monitoring the withdrawal and repayment of the guaranteed party for government-guaranteed loans and recording them in the Ministry of Finance's debt management system.

b) Reconciling the guaranteed debt balance periodically every six months and annually with the guaranteed party and annually with the guarantor.

3. The serving bank shall be responsible for:

a) Performing the duties of the serving bank throughout the process of withdrawing and repaying the project's loans.

b) Reporting to the Ministry of Finance every six months regarding the balance and changes in income and expenditure of the Project Account or other related accounts for the guaranteed party's withdrawals and repayments (if applicable).

c) If the balance in the Project Account is less than the committed amount, the serving bank has the right to request the guaranteed party to transfer additional funds and report to the Ministry of Finance.

Article 28. Amendment and Modification of Guarantee Letter Amendment and Modification of Guarantee Letter

1. The Ministry of Finance shall implement the amendment and modification of the Guarantee Letter for the loan agreement already signed at the request of the Beneficiary upon receipt of the following complete and valid documents:

a) A written request from the Beneficiary explaining clearly the reasons, contents of the proposed amendment and modification of the Guarantee Letter, and the impact of such amendment and modification on the performance of the Beneficiary's obligations under the loan agreement.

b) Modified and supplementary documents of the loan agreement.

c) Draft of the document amending and modifying the Guarantee Letter proposed by the Guarantor (if any).

2. In cases where the content of the amendment and modification of the Guarantee Letter for the loan agreement already signed does not increase the total principal amount of the loan guaranteed by the Government and does not change the Beneficiary, the Prime Minister authorizes the Minister of Finance to decide and issue the amended Guarantee Letter document or appendix within fifteen days from the date of receiving the complete and valid documents as stipulated in Clause 1 of this Article from the Guarantor.

3. In cases where the content of the amendment and modification of the Guarantee Letter for the loan agreement already signed increases the total principal amount of the loan guaranteed by the Government or changes the Beneficiary, the Ministry of Finance shall submit to the Prime Minister for decision before issuing the amended Guarantee Letter document or appendix.
guarantee.

Section 2

COLLECTION AND USE OF GUARANTEE FEES

 

Article 29. Government Guarantee Fee Government Guarantee Fee

1. The Government Guarantee Fee shall be determined by the Ministry of Finance based on the financial plan assessment results of the program or project, the financial situation of the enterprise or credit institution, depending on the level of risk, but shall not exceed two percent per annum on the outstanding guaranteed debt.

2. The level of the Government Guarantee Fee is calculated based on the sum of two
fee rates:

a) Calculated according to the average repayment factor of the first five years of the project and the financial capacity factor of the enterprise applying for government guarantee at the time of assessing the government guarantee application for loans or bond issuances for investment projects.

b) Calculated according to the minimum capital adequacy ratio of the credit institution applying for government guarantee for loans or bond issuances.
credit.

3. The level of the Government Guarantee Fee is specifically defined in the Government Guarantee Fee Schedule in Appendix III of this Decree.

4. Apply the minimum fee rate of the average repayment factor of the first five years of the project and the corresponding fee rate with the financial capacity factor of the enterprise in the Government Guarantee Fee Schedule to determine the guarantee fee for cases where there is no reassessment of the financial plan as provided for in point d, Clause 1, Article 16 of this Decree.

5. The Government decides not to collect the Government Guarantee Fee for loans or bond issuances guaranteed by the Government to implement special programs or projects decided by the National Assembly, the Government, or the Prime Minister for investment purposes.

Article 30. Government Guarantee Fee Collection and Payment  Collection and payment of government guarantee fees

1. The government guarantee fee shall be calculated based on the principal balance of the loan, bond issuance, and currency borrowed under the government guarantee at the rate approved by the Prime Minister, starting from the first withdrawal date or the payment date for purchasing bonds.

2. The government guarantee fee shall be denominated in the borrowing currency and collected in Vietnamese Dong converted at the selling exchange rate officially announced by the Vietnam Joint Stock Commercial Bank for Foreign Trade at the time of fee submission and must be paid to the Debt Repayment Reserve Fund on the interest payment date of the guaranteed loan or bond issuance.

3. Within ten days from the due date as stipulated in Clause 2 of this Article, if the Ministry of Finance does not receive the required fee, the guaranteed party shall bear overdue interest on the unpaid government guarantee fee:

a) Calculated from the due date to the actual payment date based on the number of overdue days.
actually paid.

b) The interest rate applied to the overdue government guarantee fee shall be the same as the interest rate of the guaranteed loan or bond issuance.

c) If the interest rate of the loan or bond issuance is floating, the Ministry of Finance shall apply the reference interest rate corresponding to the repayment period of the guaranteed loan or bond issuance to calculate the overdue interest.

Article 31. Use of Government Guarantee Fee  Use of government guarantee fees

1. The government guarantee fee constitutes the revenue of the Debt Repayment Reserve Fund, managed by the Debt Repayment Reserve Fund and used to create sources for the Debt Repayment Reserve Fund, including the fulfillment of the guarantor's obligations.

2. The Ministry of Finance may allocate 1.5% of the total actual government guarantee fees collected for use in the issuance and management of government guarantees according to the contents permitted by the Prime Minister.

In cases where opinions of independent organizations or experts are needed to serve the assessment work for issuing government guarantees, the Minister of Finance decides on the use of the allocated fee for administrative expenses for organizations or experts in each specific case after approval by the Prime Minister.

 

Section 3

COLLATERAL ASSETS

 

Article 32. Collateral for Loans and Bond Issuance Collateral for loans and bond issuances

1. Except for loans and bond issuances of policy banks guaranteed by the government, enterprises, individuals, and related organizations involved in government-guaranteed loan projects must provide collateral to the government guarantee issuing authority (Ministry of Finance) in accordance with the law and guidelines issued by the Ministry of Finance.

2. The collateral to ensure the fulfillment of the guaranteed party's obligations towards the Ministry of Finance includes assets formed from the government-guaranteed loan, other assets from the guaranteed party's own capital or other lawful capital, or assets of other organizations or individuals related to the government-guaranteed loan project. The value of the collateral must be at least 120% of the original value of the guaranteed loan or bond issuance.

3. The collateral must be properly managed and used by the guaranteed party for its intended purpose. The collateral cannot be sold or exchanged without the consent of the Ministry of Finance. The guaranteed party is responsible for providing additional collateral to secure the remaining debt of the government-guaranteed loan or bond issuance before releasing the initial collateral.

4. The government decides on the provision of collateral to secure government-guaranteed loans or bond issuances in cases where it is impossible to comply with the law, or when there is no applicable legal regulation, or when the collateral becomes state property before the government-guaranteed loan expires or the guarantee is implemented upon the authorization of the competent authority.

Article 33. Management of Mortgage of Assets 1. The mortgage contract shall be concluded and registered as a secured transaction before the Ministry of Finance issues the Guarantee Letter.

2. The beneficiary of the guarantee shall register the secured transaction for the mortgaged assets related to the loan or bond issuance guaranteed by the Government according to the laws on secured transactions after the mortgage contract between the beneficiary and the Ministry of Finance or the organization authorized by the Ministry of Finance has been signed.

3. The Ministry of Finance may engage an independent organization to appraise, inspect, and supervise the mortgaged assets when compulsory execution is required under the law and to handle the mortgaged assets. The beneficiary of the guarantee shall bear the costs thereof.

4. Parties related to the mortgaged assets shall comply with the provisions of the law on mortgaged assets.

5. The mortgage contract shall cease to be effective only when the beneficiary of the guarantee has fulfilled all obligations towards the lender under the Guarantee Letter and towards the Ministry of Finance under the relevant documents concerning the Guarantee Letter.

Article 34. Handling of Mortgaged Assets

1. In case the beneficiary of the guarantee fails to perform or performs incompletely the debt repayment obligations and the Ministry of Finance has fully performed the debt repayment obligations and the beneficiary of the guarantee is unable to repay the Ministry of Finance, the mortgaged assets shall be handled to ensure recovery of the debt for the Ministry of Finance. 2. The method of handling the mortgaged assets shall be carried out according to the provisions of the mortgage contract and the laws on secured transactions.

3. The proceeds from the handling of the mortgaged assets shall be collected into the Debt Repayment Reserve Fund as a source of repayment for the loan guaranteed by the Government.

Article 35. Cancellation and Termination of Mortgage of Assets

1. The cancellation and termination of the mortgage of assets securing payment obligations for loans and bond issuances guaranteed by the Government shall be implemented in accordance with current laws.

2. The Government shall decide on the cancellation or termination of the mortgage of assets securing loans and bond issuances guaranteed by the Government in cases where the mortgage of assets is no longer effective according to the laws on secured transactions, or the mortgaged assets for loans guaranteed by the Government have become state-owned assets. TRANSFER AND ASSIGNMENT

Article 36. Transfer and Assignment of Loans and Bond Issuances

1. The transfer and assignment of loans and bond issuances guaranteed by the Government of the guarantor recipient must be approved by the Ministry of Finance. The Ministry of Finance will only consider the guarantor recipient's proposal for transfer and assignment of loans and bond issuances if such transfer and assignment does not increase the guarantor's obligations.

 

Section 4

The Ministry of Finance will respond in writing within thirty days from the date of receipt of the complete transfer and assignment proposal documents of the guarantor recipient including:

a) A document proposing approval of the transfer and assignment of the guarantor recipient clearly stating the reasons for the transfer and assignment and the transferee, assignee; and confirming that the guarantor's obligations will not increase after the transfer and assignment (original). b) Written consent to the transfer and assignment of the beneficiary of the guarantee (original).

c) Draft transfer and assignment documents for loans and bond issuances (if any), agreed upon by all parties, which include the transferee, assignee of the loan and bond issuance accepting to assume the obligations and responsibilities of the initial guarantor recipient under the loan agreement and bond issuance agreement.

2. The transfer and assignment of loans guaranteed by the Government of the beneficiary of the guarantee must be approved by the Prime Minister. The transferee, assignee must meet the conditions for the beneficiary of the guarantee as stipulated by the law and this Decree.

Within thirty days from the date of receipt of the complete valid documents of the beneficiary of the guarantee, the Ministry of Finance will report to the Prime Minister for approval or rejection. The documents (originals) include:

a) Proposal for transfer and assignment of loans guaranteed by the Government, specifying: Name of the transferee, assignee; reasons for transfer and assignment; capacity of the transferee, assignee; plan of operation of the transferee, assignee for the project; proof of financial capability of the transferee, assignee regarding ability to repay remaining debt of the loan (original).

b) Financial statements of the transferee, assignee for the last three years audited by the State Audit Office or an independent auditor (certified copy).

c) Commitment of the transferee, assignee of the loan and bond issuance of the beneficiary of the guarantee to assume obligations and responsibilities for the loan and bond issuance guaranteed by the Government corresponding to the scope of transfer and assignment from the beneficiary of the guarantee (original);

d) Written non-opposition to the transfer and assignment of the loan by the guarantor recipient (certified copy).

The Ministry of Finance will respond in writing to the beneficiary of the guarantee within five working days from the date of receipt of the Prime Minister's opinion.

b) Audited financial statements of the three most recent years of the transferee, assignee (certified copy).

c) Commitment of the transferee, assignee of the loan, bond issuance of the guaranteed party to assume obligations and responsibilities for the loan, bond issuance guaranteed by the Government within the scope of the transfer, assignment from the guaranteed party (original);

d) Written opinion without objection to the transfer, assignment of the loan by the transferee (certified copy).

The Ministry of Finance will respond in writing to the guaranteed party within five working days from the date of receipt of the Prime Minister's opinion.

Article 37. Transfer, assignment of shares, contributed capital  Transfer, assignment of shares, contributions

1. The parent company, organizations, and individuals contributing capital listed in the group of shareholders holding 65% of the subscribed paid-in charter capital that have committed and registered with the Ministry of Finance before obtaining the guarantee shall not transfer or assign their contributed capital to other organizational or individual shareholders not included in the list of shareholders holding 65% of the subscribed paid-in charter capital that have been committed and registered with the Ministry of Finance before obtaining the guarantee without the approval of the Ministry of Finance.

2. In cases where the parent company, organizations, and individuals contributing capital listed in the group of shareholders holding 65% of the subscribed paid-in charter capital that have committed and registered with the Ministry of Finance before obtaining the guarantee propose to transfer or assign their contributed capital to other organizational or individual shareholders (not included in the registered shareholder list), the Ministry of Finance shall examine and report to the Prime Minister for approval of the transfer or assignment of shares and contributed capital of the guaranteed entity within fifteen working days if the transferee or assignee (not included in the registered shareholder list) meets financial capability criteria at least equal to those of the transferring or assigning shareholder of the guaranteed entity and upon receipt of the following complete documents:

a) A letter requesting the transfer or assignment from the guaranteed entity, clearly stating: Name of the transferring or assigning party; Name of the transferee or assignee; reasons for the transfer or assignment
(original).

b) Documentation proving the capacity of the transferee or assignee (certified copy).

c) Financial statements of the last three years of the transferee or assignee audited by state auditors or independent auditors (certified copy).

d) A written commitment from the transferee or assignee to assume all responsibilities and obligations of the transferring or assigning party corresponding to the transferred or assigned shares or contributed capital (original).

3. The guaranteed entity, which is a state-owned enterprise or credit institution undergoing shareholding reform, shall be responsible for reporting and seeking the opinion of the Ministry of Finance on the shareholding reform plan and the plan for handling government-guaranteed loans before submitting it to the competent authority for approval.

4. The guaranteed entity shall submit a written request for the opinion of the Ministry of Finance when transferring part or all of the shares of companies owned by Vietnamese organizations and individuals to foreign strategic shareholders before
implementing entity.

5. Before listing on the stock market and trading shares in accordance with the law, the guaranteed party must report to the Ministry of Finance about the anticipated listing time and place.

5. Prior to listing on the securities market and trading shares in accordance with the law, the guaranteed entity must report to the Ministry of Finance about the expected listing date and the listing venue.

Article 38. Transfer and Assignment of Projects and Post-Investment Assets  Transfer, assignment of projects, assets after investment

1. The transfer and assignment of projects and post-investment assets by the Borrower must be subject to the prior approval of the Ministry of Finance.

2. If the transfer or assignment of projects and post-investment assets results in changes to the Borrower's rights over mortgaged assets, the Borrower shall be responsible for providing alternative collateral to secure its obligations before transferring or assigning such assets.

3. The transfer of post-investment assets does not alter the related obligations of the Borrower towards the lender and the Ministry of Finance.

4. The parties involved in the transaction of transferring or assigning projects and assets shall be responsible for adjusting the Mortgage Contract or Future Mortgage Contract and their appendices before the transfer and registering the security transaction again after the transfer.

 

Section 5

MANAGEMENT OF RISKS FOR LOANS AND BONDS ISSUED WITH GOVERNMENT GUARANTEE

 

Article 39. Risk Management Principles  Risk management principles

1. Loans and bond issuances with government guarantee are classified periodically by the Ministry of Finance and incorporated into the debt risk management program based on the performance of the Borrower’s debt repayment obligations:

a) Group 1: Loans and bond issuances being repaid fully and on time.

b) Group 2: Loans and bond issuances requiring borrowing from the Debt Repayment Reserve Fund for one to three payment periods (interest or principal or both); currently without outstanding balance with the Debt Repayment Reserve Fund.

c) Group 3: Loans and bond issuances requiring borrowing from the Debt Repayment Reserve Fund for one to three payment periods; currently with overdue balance within the limit with the Debt Repayment Reserve Fund.

d) Group 4: Loans and bond issuances requiring borrowing from the Debt Repayment Reserve Fund for more than three payment periods; currently with overdue balance with the Debt Repayment Reserve Fund.

e) Group 5: Loans and bond issuances unable to repay the Debt Repayment Reserve Fund or with low likelihood of recovery.
low debt.

2. Borrowers with debts from Groups 3 to 5 must undergo financial supervision by the Ministry of Finance through the Service Bank regarding their monthly cash flow to manage risks.

Article 40. Measures to Address Risks  Risk management measures

1. The Ministry of Finance implements debt classification during the monitoring of loans and bond issuances with government guarantee according to the principles set forth in Article 39 of this Decree.

2. The Ministry of Finance applies risk management practices as follows:

a) Not considering granting guarantees to Borrowers who still have outstanding balances with the Debt Repayment Reserve Fund, parent companies with subsidiaries having debts in Groups 4 and 5 as defined in Article 39 of this Decree until all debts with the Debt Repayment Reserve Fund and those guaranteed by the Government are fully repaid.
guarantee.

b) Implementing cash flow supervision of Borrowers through the Service Bank as stipulated in this Decree.

c) Exercising the right to recover debts from Borrowers as prescribed in this Decree.

3. Borrowers with debts in Groups 4 and 5 must implement the following risk management measures:

a) For debts in Group 4: Borrowers are responsible for reporting monthly to the Ministry of Finance and the supervisory authority (if any) on the entire cash inflow and outflow of the enterprise.

b) For debts in Group 5: Borrowers are responsible for complying with the approved measures by the Prime Minister, including the disposal of collateral (if any) to recover debts.

4. Annually, the Debt Repayment Reserve Fund allocates plans and reserve sources for debt repayment for government-guaranteed loans in Groups 4 and 5 according to the principle of ensuring that the balance of the Debt Repayment Reserve Fund is at least equal to the repayment obligations of these loans from government guarantee fee revenues for the year. In cases where the Debt Repayment Reserve Fund lacks sufficient resources, the Ministry of Finance reports to the Prime Minister for handling solutions.

 

Chapter 6

REPORTING, AUDITING, SUPERVISION

 

Article 41. Reporting Obligations of the Guaranteed Party  Reporting system of the guaranteed party

1. The guaranteed party shall be responsible for submitting financial reports to the Ministry of Finance every six months and annually. Annual financial reports must be certified by state audit agencies or independent auditors. In cases deemed necessary, the Ministry of Finance may request the guaranteed party to report on related matters.

2. Reports on capital withdrawal, debt repayment, outstanding guarantee debts, implementation of programs and projects, accumulation of funds for debt repayment, and other relevant contents at each stage:

a) During the construction phase.

b) At the end of the construction phase.

c) Post-project evaluation report after project completion.

The detailed content and format of each type of report shall be carried out according to specific guidelines issued by the Ministry of Finance.

Article 42. Inspection and Supervision  Inspection and supervision

1. The Ministry of Finance has the authority to periodically supervise the fulfillment of obligations by the guaranteed party:

a) Progress in withdrawing capital according to the registered plan.

b) Fulfillment of debt repayment obligations.

c) Allocation of equity capital as prescribed.

d) Fulfillment of obligations regarding collateral.

đ) Monitoring the implementation of additional commitments made by the guaranteed party as required by the Government or the Prime Minister in specific cases.

2. If the guaranteed party shows signs of financial difficulties, breaches its obligations, or has outstanding loan balances, bond issuance balances, or mandatory borrowing balances from the Accumulation Fund under Groups 4 or 5 as defined in Article 39 of this Decree, the Ministry of Finance has the right to inspect the project's financial situation or request the representative agency of the owner (if any) or the sector management agency to inspect the project's financial situation, determine the causes, and report to the Prime Minister measures for handling.
3. The guarantor shares information about inspection and supervision reports (if any) within the permissible scope with the guarantor to coordinate risk management.

MEASURES TO ENSURE DEBT REPAYMENT OF THE GUARANTEED PARTY

 

Section 7

MEASURES TO ENSURE REPAYMENT OF LOANS AND BONDS OF THE GUARANTEED PARTY

Article 43. Measures to Ensure Debt Repayment of the Guaranteed Party  Guaranteeing repayment of loans and bonds of the guaranteed party
guarantee

1. The guaranteed party is responsible for arranging sufficient funds to repay loans and bond debts on time.

2. In case the guaranteed party is unable to repay the debt, the guarantor (the Ministry of Finance) has the right:

a) To request the servicing bank to automatically transfer funds from the Project Account of the guaranteed party to ensure repayment to the guarantor.

b) To request the servicing bank to instruct financial institutions where the guaranteed party has deposit accounts to transfer funds from these accounts to repay the debt if the Project Account is insufficient.

c) In cases where the guaranteed party is required to purchase insurance to cover debt repayment obligations, the guaranteed party is responsible for working with the insurance agency to fulfill the debt repayment according to the signed insurance contract.

3. Guarantees for debt repayment by the parent company (if any) or major shareholders:

a) In cases where the guaranteed party lacks sources to repay the debt, the guaranteed party reports to the parent company (if any) or major shareholders holding 65% of registered shares with the Ministry of Finance six months before the debt repayment period to repay the debt on behalf; simultaneously sending the report to the Ministry of Finance and the representative agency of the owner (for state-owned enterprises or enterprises with more than 50% state capital).

b) In cases where the parent company or major shareholders holding 65% of registered shares with the Ministry of Finance cannot repay the debt on behalf, the guaranteed party must compulsorily borrow from the Accumulation Fund for debt repayment to the guarantor according to the conditions stipulated in Articles 44 and 45 of this Decree and be subject to supervision by the Ministry of Finance as provided for in Clause 2 of Article 39 and Clauses 2 and 3 of Article 40 of this Decree.

The Ministry of Finance will coordinate with relevant agencies to compile and report to the Prime Minister on solutions for handling. The guaranteed party is responsible for complying with the approved handling plan by the Prime Minister.

4. In cases where the guaranteed party completely loses the ability to repay the debt (unable to resume production from the date the Prime Minister approves the handling plan), the Ministry of Finance will report to the Prime Minister to decide on the disposal of collateral assets according to Article 34 of this Decree.

If the proceeds from the disposal of collateral assets are insufficient to recover the loan debt, the guaranteed party or the parent company or major shareholders holding 65% of registered shares with the Ministry of Finance are responsible for continuing to assume the remaining debt. In cases where the guaranteed party goes bankrupt, it shall be handled according to relevant laws.

5. In all cases of non-repayment of the above debts, if determined to be due to subjective reasons, the Ministry of Finance will recommend that the Prime Minister assign the representative agency of the owner (for state-owned enterprises or enterprises with more than 50% state capital) or relevant agencies to handle according to the law on organizations and individuals who violate regulations leading to non-repayment of debt as agreed upon in the loan agreement or compulsory loan contract.

6. If the guaranteed party does not report to the Ministry of Finance in advance about difficulties in fulfilling debt repayment obligations causing losses to the Accumulation Fund for debt repayment in terms of funds raised for advance payment, the guaranteed party is responsible for fully compensating all material losses to the Accumulation Fund for debt repayment.

7. Enterprises still having outstanding balances with the Accumulation Fund for debt repayment for government-guaranteed loans or relending are not eligible to be considered for new guarantees or approval of foreign government loan projects.

Article 44. Compulsory Borrowing from the Debt Repayment Reserve Fund  Compulsory borrowing from the Debt Repayment Reserve Fund

1. In case a guaranteed party encounters temporary or long-term difficulties and is unable to fulfill its due debt obligations for a loan or bond issuance guaranteed by the Government, it must compulsorily borrow from the Debt Repayment Reserve Fund for the amount that the Debt Repayment Reserve Fund is required to advance to repay debts under point b, Clause 3, Article 43.

a) For borrowing to cover one repayment period (principal and/or interest), the Minister of Finance shall decide on the compulsory loan from the Debt Repayment Reserve Fund.

b) For borrowing to cover two or more repayment periods (principal and/or interest), the Ministry of Finance shall report to the Prime Minister for consideration and decision.

2. When borrowing compulsorily from the Debt Repayment Reserve Fund, the guaranteed party and the parent company (if any) shall be responsible for signing a compulsory loan agreement with the Ministry of Finance for the amount paid by the Debt Repayment Reserve Fund to the guaranteed party. The parent company shall share the obligation to repay the Debt Repayment Reserve Fund if the guaranteed party cannot fully or partially fulfill its debt obligations under the signed compulsory loan agreement.

3. During the borrowing period from the Debt Repayment Reserve Fund:

a) The guaranteed party agrees to allow the Ministry of Finance to control the Project Account and other deposit accounts during the borrowing period from the Debt Repayment Reserve Fund, and the automatic transfer of funds from the Project Account or other accounts of the guaranteed party to repay the Debt Repayment Reserve Fund when due.

b) The guaranteed party shall report to the Ministry of Finance all income and expenses, cash balances, deposits, financial status, and production and business operation status of the project quarterly if borrowing up to two repayment periods; monthly if borrowing over two repayment periods, and submit additional reports as requested by the Ministry of Finance from the date of compulsory borrowing from the Debt Repayment Reserve Fund.

c) The Ministry of Finance has the right to conduct mandatory annual financial inspections of the guaranteed party until the compulsory loan from the Debt Repayment Reserve Fund is fully repaid. In necessary cases, the Ministry of Finance has the right to decide on inspection according to the law on inspection.

4. Documents for Compulsory Borrowing from the Debt Repayment Reserve Fund:

The guaranteed party proves temporary or complete inability to repay the debt or the parent company (if any) proves inability to repay on behalf of the guaranteed party, accompanied by the following documents:

a) The balance of the Project Account and other accounts of the guaranteed party is insufficient to repay part or all of the due debt obligations for the loan or bond issuance guaranteed by the Government, confirmed by the servicing bank and the bank where the account is opened.

b) The guaranteed party or the parent company (if any) does not have profits and sufficient sources, accompanied by the financial statements of the previous year, the six-month report of the guaranteed party and the parent company (if any).

c) A letter of refusal to lend from at least three commercial banks for the guaranteed party or for the parent company (if any).

d) The application for borrowing from the Debt Repayment Reserve Fund by the guaranteed party must specify the amount borrowed (separating principal, interest, and fees), the term of borrowing, the repayment schedule, and the expected source of repayment, with comments from the parent company (if any) and the representative body of the owner (for state-owned enterprises or enterprises with state capital exceeding 50% of the charter capital), sent to the Ministry of Finance three months before the due date of repayment.

5. Repayment under the Compulsory Loan Agreement:

a) The guaranteed party shall fulfill the repayment to the Debt Repayment Reserve Fund according to the signed Compulsory Loan Agreement.

b) If the Project Account or other deposit accounts of the guaranteed party at commercial banks have a balance reported quarterly or monthly by the guaranteed party, the Ministry of Finance may exercise the right to request the servicing bank or the bank where the guaranteed party opens the account to forcibly transfer funds from the Project Account or other accounts of the guaranteed party and notify the guaranteed party to recover overdue or due debts (if any) if the guaranteed party did not incur losses in the most recent fiscal year; or recover pre-matured debts for the Debt Repayment Reserve Fund (if any) if the guaranteed party did not incur losses in the two consecutive years prior to that.

Article 45. Conditions for Compulsory Loans from the Debt Repayment Reserve Fund Compulsory Loan Conditions from the Debt Repayment Reserve Fund

1. The Borrower must enter into a compulsory loan agreement with the Ministry of Finance (Debt Repayment Reserve Fund) for each compulsory loan occasion arising from the violations stipulated in Article 43 of this Decree, subject to the following conditions:

a) The compulsory loan funds from the Debt Repayment Reserve Fund to settle the due debt obligations of the guaranteed loan shall be automatically authorized by the Borrower irrevocably to the Debt Repayment Reserve Fund to directly repay to the lender, which shall be considered as the principal debt of the Borrower to the Debt Repayment Reserve Fund.

b) Loan currency and repayment currency: The currency of the loan agreement and bond issuance agreement. The repayment currency can be the loan currency or converted into Vietnamese Dong at the selling rate officially announced by the Vietnam Joint Stock Commercial Bank for Foreign Trade at the time of repayment.

c) Interest rate on the loan: The interest rate of the guaranteed loan and bond issuance according to the loan agreement and bond issuance agreement. The interest rate on the loan from the Debt Repayment Reserve Fund will be adjusted in case of interest rate adjustment of the loan agreement and bond issuance agreement during implementation.

d) The interest on the loan from the Debt Repayment Reserve Fund is calculated based on the outstanding loan balance and the actual number of loan days from the date the Ministry of Finance transfers payment to the lender on behalf of the Borrower until the date the Ministry of Finance recovers the entire amount lent from the Borrower, based on a year of 360 days.
e) The term of the loan depends on the repayment capacity of each project. The Minister of Finance shall consider and decide the term of the compulsory loan for interest-only payments not exceeding two repayment periods; for principal repayment loans (and interest if any) not exceeding two years. In cases where the term of the compulsory loan exceeds the specified terms, the Ministry of Finance shall submit to the Prime Minister for consideration and decision.

g) The principal and interest of the loan from the Debt Repayment Reserve Fund shall be paid annually on a fixed schedule.

h) The Borrower shall bear all actual costs incurred related to the transfer of debt repayment on behalf of the Borrower.

2. The compulsory loan agreement with the Debt Repayment Reserve Fund shall be signed before the Ministry of Finance transfers payment to the lender on behalf of the Borrower.

Article 46. Fulfillment of Guarantor's Obligations

1. Upon receipt of the debt repayment request letter from the Guaranteed Party, the Guarantor (Ministry of Finance) shall have the responsibility to repay the debt to the Guaranteed Party from the Debt Repayment Reserve Fund as stipulated in Point d, Clause 1, Article 36 of the Public Debt Management Law.
b) Parent company of the business requesting the guarantee or of the shareholders, contributors (excluding individual shareholders, contributors) holding at least 5% of the business's equity in cases where the business is newly established (less than three years of operation) or has not generated revenue from production and business activities. In case the application is submitted in the second half of the fiscal year, the financial report for the first six months must be supplemented.

2. The Ministry of Finance shall implement compulsory lending to the Borrower for debt repayment prior to payment to the Guaranteed Party and after the Borrower has fulfilled the provisions of Article 44 of this Decree.  Performance of the guarantor's obligations

1. Upon receiving a letter demanding repayment from the beneficiary, the guarantor (Ministry of Finance) shall be responsible for repaying the beneficiary from the Debt Repayment Reserve Fund according to Point d Clause 1 Article 36 of the Public Debt Management Law.

2. The Ministry of Finance shall compulsorily lend to the guaranteed party to repay debts before paying the beneficiary and after the guaranteed party has complied with the provisions of Article 44 of this Decree.

Article 47.                    Handling the Accumulated Debt Fund to Fulfill the Guarantor's Obligations

1. In cases where the Accumulated Debt Fund does not have sufficient resources for the Borrower to repay the Debtor, the Ministry of Finance shall report to the Prime Minister on the handling plan.

2. In cases where the Borrower loses the ability to pay and after disposing of the collateral assets still lacks sufficient resources to repay the Accumulated Debt Fund, the Ministry of Finance shall report to the Prime Minister to request compensation.

Article 48.                    Handling Violations by the Borrower

1. The Borrower shall be deemed to have committed a violation if they fail to fully fulfill the relevant responsibilities stipulated in this Decree.

2. Within sixty days from the date the Ministry of Finance sends the notification, if the violations are not remedied by the Borrower, the Ministry of Finance shall conduct financial supervision over the Borrower, and simultaneously report to the Prime Minister not to approve new loan guarantees or renewed foreign loans or capital disbursements from the state budget for the Borrower.

3. The Ministry of Finance shall apply specific sanctions against the Borrower in the following cases of violation:

a) Requesting the Lender to temporarily suspend the requested drawdown amount if issues are found in the drawdown documentation and requiring the Borrower to correct the drawdown documentation.

b) Increasing the government guarantee fee by ten percent of the rate approved by the Prime Minister for the project and applying it to the loan interest rate or bond issuance guaranteed by the Government for the next three consecutive years, but the total guarantee fee shall not exceed two percent per annum when the Borrower fails to allocate registered equity capital in the planned year or as prescribed by law; fails to implement mortgage procedures, reporting requirements, maintenance of the Project Account balance, and other provisions set forth in this Decree.

 

Chapter IV

RESPONSIBILITIES AND OBLIGATIONS

 OF ORGANIZATIONS, ENTITIES, AND INDIVIDUALS

 

Section 1

RESPONSIBILITIES OF STATE MANAGEMENT ORGANIZATIONS AND ORGANIZATIONS AND INDIVIDUALS PROVIDING SERVICES IN IMPLEMENTING SERVICE PRICES

Article 49.                    Ministry of Finance,

1. Implementing the responsibilities of the guarantor agency as stipulated in Clause 1, Article 36 of the Public Debt Management Law:

a) Participating in negotiations and providing comments on loan conditions and proposed loan agreements for government guarantees based on the documents provided by enterprises and credit institutions according to Articles 15 and 20 of this Decree.

b) Applying measures prescribed in this Decree to recover debts and costs arising from repaying on behalf of the Borrower, including requesting banks serving as custodians or banks where the Borrower maintains accounts to transfer funds from the Borrower's deposits to the Accumulated Debt Fund without the Borrower's consent (account holder).

c) Reporting to the Prime Minister on the situation and sources for fulfilling the Guarantor's obligations as prescribed in Article 47 of this Decree.

d) Periodically reporting to the Prime Minister in the second quarter of the following year on the consolidated status of issued guarantees as stipulated in Point g, Clause 1, Article 36 of the Public Debt Management Law:

- The situation and specific figures of loans and bond issuances that have been guaranteed in the previous year;

- The cumulative figures up to the end of the previous year of all loans and bond issuances guaranteed by the Government;

- An overall assessment of the implementation of the guarantee limit in the previous year;
 

- An overall assessment of the Borrower's fulfillment of their obligations;
- Achievements, limitations, difficulties in issuing and managing guarantees, and recommendations.

2. Monitoring the drawdown and repayment of the Borrower for loans guaranteed by the Government.

3. Organizing guidance, inspection, and supervision of collateral for loans and international bond issuances guaranteed by the Government.

4. Reviewing or providing opinions to the representative owner agencies, sector management agencies, and Borrowers before approving the proposal for government guarantees as stipulated in Clause 1 and Clause 2, Article 12 of this Decree; providing opinions to the representative owner agencies, sector management agencies, and Borrowers on issues related to loans and bond issuances guaranteed by the Government during the implementation process.

5. Seeking opinions from representative owner agencies, sector management agencies, and People's Committees of provinces and cities regarding enterprises, programs, and projects borrowing funds guaranteed by the Government during the review process for government guarantees.

6. Reporting to the Prime Minister any emergent issues arising during the management of loans and bond issuances guaranteed by the Government.

7. Providing guidance on certain contents as stipulated in Clause 1, Article 32 and Clause 2, Article 41 of this Decree.
guarantee

7. Guidance on certain contents as stipulated in Clause 1 Article 32 and Clause 2 Article 41 of this Decree.

Article 50.                    Ministry of Justice

1. Participate in negotiations and provide opinions on legal issues in draft foreign loan agreements, international bond issuance agreements requesting government guarantees, and draft guarantee letters.

2. Lead discussions on the content of legal opinions and issue legal opinions in accordance with the law to the Lender.

3. Coordinate with the Ministry of Finance to handle legal disputes arising from the implementation of the Guarantee Letter.

Article 51.                    Ministry of Foreign Affairs

Coordinate with the Ministry of Finance to designate appropriate Vietnamese representative offices abroad to act as Receiving Agents for litigation documents as stipulated in the Guarantee Letter.

Article 52.                    State Bank of Vietnam

1. Provide opinions to the Ministry of Finance regarding the interest rate of domestic loans for enterprises requesting government guarantees.

2. Approve loan projects, bond issuance projects domestically and internationally for state-owned credit organizations or provide opinions on loan projects, bond issuance projects domestically and internationally for credit organizations requesting government guarantees to implement targeted State credit programs.

3. Implement registration confirmation or registration change for foreign loans, international bond issuances guaranteed by the Government for the Beneficiary after the Ministry of Finance issues the Guarantee Letter.

4. Provide opinions to the Ministry of Finance regarding the minimum capital adequacy ratio of credit organizations requesting approval of policy or requesting government guarantees.

5. Coordinate with the Ministry of Finance to report to the Prime Minister on the balance of foreign exchange according to the law for foreign loans, international bond issuances guaranteed by the Government when necessary for the Guarantor to fulfill payment obligations under the Guarantee Letter as requested by the Ministry of Finance.

6. Update information related to the status of the Beneficiary's loans at credit institutions, foreign bank branches into the State Bank of Vietnam’s credit information system.

Article 53.                    Ministries, agencies equivalent to ministries, sector management agencies

1. Approve loan projects, bond issuance projects domestically and internationally for enterprises holding 100% state capital or provide opinions on loan projects, bond issuance projects domestically and internationally for enterprises or sectors, fields under their administrative responsibility with the following main contents:

a) Approve loans for enterprises to invest in programs, projects for enterprises holding 100% state capital.

b) Provide opinions on the rationality of enterprise calculation parameters (expected selling price or revenue source; machine operation capacity, frequency; depreciation,...) to build financial plans and cash flow repayment.

c) Evaluate the effectiveness, debt repayment capability of the project sponsor and the project's financial plan.

d) The feasibility of enterprise commitments in loan agreements.

2. Urge the managed Borrower enterprises to strictly fulfill their commitments to lenders and the Ministry of Finance.

3. Lead inspections, supervision, and lead handling of issues related to breaches of obligations by enterprises, credit organizations borrowing under government guarantees within their management authority.

4. Notify the Ministry of Finance in writing of decisions, policies, or situations that may affect the implementation of projects and the ability to fulfill payment obligations under loan agreements, and propose handling solutions of managed enterprises.

5. Provide opinions as the representative owner agency in cases where enterprises, credit organizations with less than 100% state capital borrow and request government guarantees.

6. Provide opinions on issues within their management scope related to loan projects requesting government guarantees as requested by the Ministry of Finance during the review of guarantee policy approval or guarantee approval for enterprises.

7. Coordinate with the Ministry of Finance to handle disputes arising from the implementation of the Guarantee Letter.

Article 54.  Provincial People's Committee, city People's Committee

1. Participate in providing opinions on the business operations of enterprises requesting guarantee within their jurisdiction (if applicable); on the implementation of procedures related to investment projects in their jurisdiction at the request of the Ministry of Finance.

2. Coordinate in handling collateral assets under the management of the provincial or city People's Committee.

3. Supervise enterprises in implementing programs and projects in compliance with local laws.

 

Section 2

RESPONSIBILITIES AND OBLIGATIONS OF THE PARTIES INVOLVED IN GOVERNMENT GUARANTEES

PARTIES INVOLVED IN GOVERNMENT GUARANTEES

 

Article 55. Responsibilities of enterprises and credit organizations requesting guarantees

1. Provide complete documentation and be responsible for the accuracy and correctness of the data and documents provided to the Ministry of Finance for consideration and approval of the government guarantee proposal and the request for a government guarantee in accordance with this Decree and guiding documents.

2. Consult with the Ministry of Finance before authorizing the arrangement of funds if there are specific financial conditions of the proposed loan for which a government guarantee is requested after approval of the guarantee proposal.

3. Lead negotiations on domestic and foreign loan agreements, international bond issuance agreements.

4. Provide relevant agencies with draft loan agreements, draft Guarantee Letters, and legal opinions (if any) of domestic and foreign loans, international bond issuances not later than seven working days prior to negotiations.

5. Provide the Ministry of Finance with officially signed domestic and foreign loan agreements, international bond issuance agreements.

Article 56. Obligations of the Guaranteed Party

1. Organize the issuance of domestic and international bonds guaranteed by the Government after obtaining approval from the competent authority.

2. Propose to the Ministry of Finance the bank serving the Project; open and register with the Ministry of Finance a Project Account at the serving bank, simultaneously notifying all existing deposit accounts at credit institutions along with confirmation from the credit institution where the account was opened to the Ministry of Finance. In case of changing the serving bank, the Guaranteed Party shall report in writing to the Ministry of Finance the reasons within five working days from receipt of the request document for approval.

3. Fully and timely fulfill the obligations of the borrower and issuer of bonds according to the loan agreement and bond issuance agreement guaranteed by the Government.

4. Register and register changes to foreign loans and international bond issuances guaranteed by the Government with the State Bank of Vietnam in accordance with current laws.

5. Allocate sufficient and timely equity capital according to the project implementation schedule: Ensure adequate equity capital according to the project implementation schedule for items that must be funded from equity capital; when finalizing the completed project, ensure adequate equity capital according to the ratio registered when submitting the application for guarantee.

6. Transfer program and project revenues immediately upon occurrence into the Project Account in proportion to the portion of the loan guaranteed by the Government in the total value of the loan of the program and project.

Commit to maintaining the balance in the Project Account (in original currency or in Vietnamese Dong based on the exchange rate of the serving bank) from the first year of debt repayment obligations to ensure timely repayment of the loan according to regulations.

7. Regularly assess potential risks of the enterprise and project and study the implementation of risk prevention measures for the loan within its authority to ensure the ability to repay the loan.

8. Fulfill the obligations of the Guaranteed Party towards the Ministry of Finance:

a) Mortgage assets for the loan and bond issuance guaranteed by the Government, declare and register security transactions for mortgaged assets, supplement mortgaged assets to the Ministry of Finance in accordance with the law on security transactions.

b) Pay the full guarantee fee on time as notified by the Ministry of Finance.

c) Notify the Ministry of Finance of any changes related to the Loan Agreement, Borrower (Guarantee Recipient), shareholder structure, individual capital contributions in the enterprise implementing the program and project guaranteed by the Government.

d) Fully and timely comply with information reporting requirements as stipulated by the Ministry of Finance.

đ) Report in writing to the Ministry of Finance at least three months before the due date of debt repayment if unable to pay or anticipate partial payment of the debt obligation, clearly stating the reasons.

e) Accept compulsory debt with the Ministry of Finance in the event the Ministry of Finance lends temporarily from the Debt Repayment Reserve Fund to repay the loan guaranteed by the Government and bear the costs associated with transferring the debt repayment funds.

g) Agree to and comply with other necessary sanctions during the guarantee management process as required by the Ministry of Finance.

h) Closely cooperate with the Ministry of Finance during inspections of program and project implementation as needed.

9. Provide complete withdrawal documentation and vouchers to the serving bank for verification against the commercial contract and signed loan agreement before submitting the withdrawal application to the lender.

10. Pay service fees to the serving bank and other incidental expenses (if any) to related parties as stipulated by this Decree.

11. Conduct annual audits of the project during construction and annual audits of the enterprise after project completion and submit copies of the audit reports to the Ministry of Finance.

12. Comply with other relevant provisions of this Decree.

Article 57.                   Responsibilities of the Parent Company

1. In the case where the Guaranteed Party is a subsidiary under the parent-subsidiary structure, the parent company shall be responsible for:

a) Fulfilling the obligations of the parent company as stipulated in the commitment documents issued and sent to the Ministry of Finance prior to the government guarantee assessment.

b) Providing financial support to the Guaranteed Party to ensure that the project is implemented on schedule and that the Guaranteed Party fulfills its debt repayment obligations to the lender when encountering difficulties.

2. The parent company shall be responsible for supervising and directing the Guaranteed Party to fully fulfill the commitments made with the lender and the Ministry of Finance as stipulated in the signed documents.

Article 58.                   Responsibilities of the Lender and the Beneficiary of the Guarantee

1. The lender shall be responsible for closely cooperating with the Ministry of Finance during the negotiation of the Guarantee Letter.

2. The beneficiary of the guarantee shall be responsible for cooperating with the Ministry of Finance during the implementation of the loan guaranteed by the government and during the period the Guarantee Letter is effective:

a) Sending to the Ministry of Finance detailed copies of notices regarding each drawdown, interest rate changes (if any), and requests for repayment at the same time as sending them to the borrower.

b) Notifying the Ministry of Finance about the situation of drawdowns, repayments, and the borrower's project if any unusual issues arise.

c) Sending other notifications to the Ministry of Finance as required by the Loan Agreement guaranteed by the government.

3. The beneficiary of the guarantee shall be responsible for sharing necessary information with the Ministry of Finance about the borrower, the project, and the loan guaranteed by the government, as well as reports on monitoring and supervision within the scope permitted by it, to ensure that the loan is used for its intended purpose and that the borrower fulfills all obligations under the loan agreement.

Article 59.                   Responsibilities of the Serving Bank

The serving bank shall be responsible for:

1. Performing tasks and coordinating with the Ministry of Finance and relevant agencies during the management of programs, projects, loans, and bond issuances guaranteed by the government according to the provisions of this Decree.

2. Providing the Ministry of Finance with detailed reports from the State Bank of Vietnam's Credit Information Center on the credit status of the Guaranteed Party at the end of each fiscal year.

3. Implementing necessary measures as required by the Ministry of Finance in accordance with the law and the provisions of this Decree to recover government-guaranteed loans, debts lent to the Guaranteed Party by the Debt Repayment Fund to repay such debts, and costs incurred from repaying on behalf of the Guaranteed Party.

4. Treating equally in managing loans, recovering and settling debts, implementing security measures for government-guaranteed loans as it does for other loans of the Guaranteed Party at the serving bank.

 

Chapter V

IMPLEMENTING PROVISIONS

Article 60.  Effective Date

1. This Decree shall take effect from March 1, 2017.

2. This Decree replaces Government Decree No. 15/2011/NĐ-CP dated February 16, 2011 on the issuance and management of government guarantees.

Article 61. Transitional Provisions

1. Loans and bond issuances that have been granted government guarantees and still have less than three years remaining to fulfill their debt obligations as of the date this Decree takes effect are not required to comply with the provisions from Article 24 to Article 27 (excluding points a, b, and g of Clause 1 of Article 27) and Clause 2 of Article 32 of this Decree.

2. Loans and bond issuances currently in the process of withdrawing funds are not required to comply with the provisions set forth in Article 26 and Clause 9 of Article 56 of this Decree.
3. Build-Operate-Transfer Contract (hereinafter referred to as BOT Contract) is a contract signed between the competent state agency and the investor, project enterprise to construct infrastructure works; after completion of the works, the investor, project enterprise has the right to operate the works for a certain period of time; at the end of the period, the investor, project enterprise transfers the works to the competent state agency.

3. Loans and bond issuances, programs, and projects that have been approved for special mechanisms regarding government guarantees prior to the effective date of this Decree may continue to be implemented under the previously approved mechanisms.

4. Projects that have been approved by the Government for the issuance of government guarantees do not need to go through the approval procedures for government guarantee issuance as stipulated in this Decree.

5. Programs and projects that have been approved for government guarantee issuance must comply with the government guarantee limit provisions set forth in Article 8 of Government Decree No. 15/2011/NĐ-CP dated February 16, 2011 on the issuance and management of government guarantees within one year from the effective date of this Decree or within the time frame approved by the Government or the Prime Minister. After this period, the issuance of government guarantees shall be carried out in accordance with the provisions of this Decree.

6. The Government's guarantee for two policy banks issuing bonds according to the annual plan assigned by the competent authority shall continue to be implemented in accordance with the provisions of Government Decree No. 01/2011/NĐ-CP dated January 5, 2011 on the issuance of government bonds, guaranteed bonds, and local government bonds, and Government Decree No. 15/2011/NĐ-CP dated February 16, 2011 on the issuance and management of government guarantees until a replacement decree is issued.

7. Collateralization of assets of projects that have been granted government guarantees before the effective date of this Decree shall be carried out in accordance with the laws on collateralization of loans and bond issuances guaranteed by the Government at the time the government guarantee was issued.

Article 62.Implementation

1. The Ministers, Heads of ministerial-level agencies, Heads of governmental agencies, Chairpersons of provincial People's Committees under the central government, enterprises, organizations, and individuals related to this matter are responsible for implementing this Decree.

2. The Ministry of Finance shall provide guidance on the implementation of the contents of this Decree if necessary to meet the requirements of state management./.