Decree No. 118/2026/NĐ-CP On Loan of Central Government Budget to Foreign Governments

 

 

DECREE

ON LOAN FROM THE CENTRAL GOVERNMENT BUDGET TO FOREIGN GOVERNMENTS

 

BASED ON ARTICLE 37, POINT 6 OF THE NATIONAL BUDGET LAW NO. 89/2025/QH15 (THE NATIONAL BUDGET LAW);

BASED ON THE CONSTITUTIONAL DECREE NO. 108/2016/QH13 AS AMENDED AND ENHANCED BY THE CONSTITUTIONAL DECREE NO. 137/2025/QH15;

BASED ON THE CONSTITUTIONAL DECREE NO. 64/2025/QH15 ON ISSUANCE OF LEGISLATIVE DOCUMENTS AND THE CONSTITUTIONAL DECREE AMENDING AND ENHANCING SOME ARTICLES OF THE CONSTITUTIONAL DECREE NO. 87/2025/QH15 ON ISSUANCE OF LEGISLATIVE DOCUMENTS;

BASED ON THE FOREIGN EXCHANGE LAWFULITY DECREE NO. 28/2005/PL-UBTVQH11 AS AMENDED AND ENHANCED BY THE FOREIGN EXCHANGE LAWFULITY DECREE NO. 06/2013/UBTVQH13;

IN ACCORDANCE WITH THE PROPOSAL OF THE MINISTER OF FINANCE;

THE GOVERNMENT ISSUES THIS DECREE ON LOAN FROM THE CENTRAL GOVERNMENT BUDGET TO FOREIGN GOVERNMENTS.

CHAPTER I

 

GENERAL PROVISIONS

Article 1. Scope of Application

 

This Decree details the implementation of paragraph 6 of article 37 of the National Budget Law No. 89/2025/QH15 (National Budget Law) concerning the expenditure from the central government budget for loans to foreign governments.

Article 2. Applicability

This Decree applies to agencies, organizations, and individuals involved or related to the use of the central government budget for loans to foreign governments.

Article 3. Interpretation of Terms

In this Decree, the following terms are interpreted as follows:

1. "Loan from the central government budget to foreign governments" refers to the use by the Government of Vietnam of the central government budget for loans to foreign governments in accordance with the policy and approval of the competent authority to achieve economic and social development goals or to address urgent needs of the borrowing country.

2. "Lender" is the Government of Vietnam represented by the Ministry of Finance.

3. "Borrower" is the foreign government receiving a loan with a special traditional friendly relationship with Vietnam, represented by an agency authorized by the borrowing government to sign and implement the Loan Agreement.

4. "Loan Agreement" refers to agreements or loan agreements signed between the Lender and the Borrower and are international treaties.

5. "Drawdown Request" is a request for disbursement submitted by the Borrower to the Lender in accordance with the form specified in the Loan Agreement, including details of the value of the requested drawdown, the account into which the loan will be credited, and supporting documents proving the legitimacy of the requested drawdown as per the provisions of the Loan Agreement.

6. "Disbursement" is the action taken by the Lender after verifying the compatibility of the Drawdown Request with the provisions of the Loan Agreement to transfer the loan funds to the Borrower according to the request made by the Borrower in the Drawdown Request.

7. "Currency of Disbursement" is the currency used for disbursement and debt recovery as specified in the Loan Agreement.

8. "Loan Account" is an account opened by the Ministry of Finance at the State Treasury or a commercial bank to receive loan funds from the national budget for foreign government loans under the Loan Agreement.

9. "Outstanding Balance" is the amount of borrowed money that has been disbursed but not yet repaid or written off as of a specific point in time.

10. "Loan Term" is the period calculated from when the Lender disburses the loan to when the Borrower fully repays the principal according to the repayment schedule specified in the Loan Agreement.

11. "Grace Period" is the period calculated from when the Lender disburses the loan until the Borrower begins to repay the principal according to the repayment schedule specified in the Loan Agreement. During the grace period, the Borrower does not have to repay the principal but must pay interest as per the Loan Agreement.

12. "Due Date" is the date on which the Borrower must repay the principal and/or interest to the Lender according to the repayment schedule specified in the Loan Agreement.

13. "Overdue Debt" is the value of the principal or interest, or both, that the Borrower must pay to the Lender by the Due Date as specified in the Loan Agreement but which the Lender does not receive on the Due Date.

14. "Debt Extension" is the action taken by the Lender to agree to extend the time for repayment of principal or interest, or both, beyond the previously specified loan term under the Loan Agreement. During the debt extension period, the Borrower still has to pay interest on the loan.

15. "Debt Waiver" is the action taken by the Lender not to collect from the Borrower and not to accrue interest during the waiver period.

16. "Service Bank" is a commercial bank or policy bank designated by the Ministry of Finance in cases where it acts on behalf of the Lender for disbursement, debt recovery, regular monitoring reporting, and transactional reporting during the implementation of the loan agreement and is entitled to Service Bank Fees.

17. "Service Bank Fee" is a fee paid by the Borrower to the Service Bank on the same day as interest payment to compensate the Service Bank for business-related costs associated with disbursement and debt recovery under the loan.

17. "Bank Service Fee" is a fee paid by the Borrower to the Bank on the interest payment date to enable the Bank to recover its business costs associated with disbursing and recovering the loan capital.

Article 4. Principles of Central Budget Lending to Foreign Governments

1. Shall be in accordance with the foreign policy, guidelines, and laws of Vietnam, as well as international treaties to which Vietnam is a party. In case an international treaty to which Vietnam is a party provides otherwise than this Decree, such provisions shall prevail.

2. The lender shall utilize state budget resources exclusively for lending to governments of countries with traditional special friendly relations with Vietnam in accordance with the guidelines of the competent authority to meet the economic and social development needs or urgent needs of the borrower.

3. The provision of loan funds by the lender to the borrower must be consistent with the fiscal capacity of the lender for each year and each medium-term period.

4. The utilization of state budget resources by the lender for lending to the borrower shall ensure the principle of capital safety, minimizing the maximum risk of non-recovery of loans on time.

5. The borrower commits to fully and timely repayment of the loan to the lender and to use the loaned funds in accordance with their intended purpose, ensuring the ability to provide explanations to the lender according to the terms of the loan agreement and upon request by the lender:

6. No lending shall be made to countries assessed as having an excessively high risk level where there is a clear danger of non-recovery of the loan.

Article 5. Purpose of Lending Funds by the Lender

Based on the guidelines of the competent authority, the lender shall utilize the central budget for lending to the borrower with one or more of the following purposes:

1. To implement infrastructure projects meeting essential needs in the economic and social development of the borrower or those that have a connection with Vietnam's infrastructure to strengthen friendly relations between Vietnam and the recipient country.

2. To import goods, equipment, and services from Vietnam, prioritizing Vietnamese-origin items to promote Vietnam's trade and investment relationships with the recipient country.

3. Other special cases as determined by the competent authority.

Article 6. Conditions for Borrower to Receive Lending Funds from the Lender

To be eligible to receive lending funds from the lender, the borrower must meet the following conditions:

1. Obtain approval from the competent authority for the loan provision.

2. Provide a financial commitment of the government ensuring fiscal capacity and debt repayment capability through public debt safety indicators including: public debt as a percentage of gross domestic product (GDP), government debt as a percentage of GDP, direct government payment obligations as a percentage of annual state budget revenue, foreign debt of the country as a percentage of GDP, and foreign debt obligations of the country as a percentage of total merchandise and service exports. In cases of special purposes under paragraph 3 of Article 5 of this Decree, compliance with these conditions is determined by the competent authority.

3. Use the loaned funds in accordance with the provisions of Article 5 of this Decree.

4. The foreign government shall not have outstanding debts to the Government of Vietnam at the time of the Vietnamese government's request for a loan, except in special cases as determined by the competent authority.

Article 7. Disbursement of Loan Funds and Debt Collection by the Lender

Based on the purpose of using the loan as per the decision of the competent authority, the lender shall disburse the loan funds and collect debts in accordance with one of the following methods:

1. Disbursement of loan funds and debt collection through a bank to implement projects specified in Clause 1 of Article 5 of this Decree or for the import of goods, equipment, and services specified at Clause 2 of Article 5 of this Decree.

2. Direct disbursement of loan funds and debt collection for purposes of using the loan as per special cases decided by the competent authority in accordance with Clause 3 of Article 5 of this Decree.

Article 8. Financial Conditions of the Loan

The financial conditions of the loan include the following contents:

1. Currency of the loan: is Vietnamese Dong or a freely convertible foreign currency agreed upon by the lender and the borrower to be reported for decision-making by the competent authority on a case-by-case basis.

2. Loan term and grace period: are the loan term and grace period negotiated and agreed upon by the lender and the borrower to be reported to the competent authority in accordance with the principle of applying to the purpose of borrowing as follows:

a) For purposes of implementing projects specified in Clause 1 of Article 5 of this Decree: maximum loan term is 15 years, maximum grace period is 5 years;

b) For purposes of importing goods, equipment, and services specified in Clause 2 of Article 5 of this Decree: maximum loan term is 5 years, maximum grace period is 2 years;

c) For other purposes specified in Clause 3 of Article 5 of this Decree: maximum loan term is 10 years, maximum grace period is 3 years.

3. Loan interest rate and late payment interest rate: for each case, based on market conditions at the time of proposing the loan to the competent authority and the currency of the loan as decided by the competent authority, the lender shall submit to the competent authority for consideration and decision regarding the loan interest rate and late payment interest rate. The method of calculating interest is specified in the Loan Agreement.

4. Bank service fee in cases where disbursement and debt collection are carried out through a serving bank is 0.1% per annum calculated on the outstanding balance at the time of repayment by the borrower. The bank service fee is calculated according to the method specified in Clause 3 of Article 8 of this Decree.

Article 9. Other Conditions of the Loan

1. For loans with purposes as specified in Clauses 1 and 2 of Article 5 of this Decree, the borrower shall not use the loan to pay for the following costs:

a) Taxes, fees, and charges applicable within the territory of the country receiving the loan;

b) Land acquisition costs;

c) Project management costs of the borrower.

2. For loans with purposes as specified in Clauses 1 and 2 of Article 5 of this Decree, the borrower shall select the main contractor through a bidding process among enterprises registered and operating in Vietnam. The bidding process and procedures are agreed upon between the lender and the borrower and are specifically outlined in the Loan Agreement.

3. In cases where the selection of contractors differs from that specified in this Article, the lender and the borrower shall negotiate and agree to report to the competent authority for consideration and decision.

Article 10. Preparation of the Central Budget for Foreign Government Loans

By July 10th each year, the Ministry of Foreign Affairs provides information to the Ministry of Finance regarding the economic and social situation, the potential for generating loan needs of foreign governments with traditional special friendly relations with Vietnam. Based on a consensus with the Ministry of Foreign Affairs, taking into account the lending policy of the competent authority, the fiscal balance capacity, the negotiation schedule and signing of the Loan Agreement, the borrowing requirements of the lender, the Ministry of Finance compiles and submits to the Government a budget for foreign government loans from the central budget for the next fiscal year in accordance with Article 47, Article 48, and Article 49 of the Law on State Budget.

Article 11. Decision on Allocation of Central Budget for Foreign Government Loans

Based on the National Assembly's resolution on the state budget and central budget allocation, the Prime Minister decides to allocate and assign the central budget expenditure task to the Ministry of Finance to implement foreign government loans.

Article 12. Supplemental Budget for Foreign Government Loans from Central Budget

1. The value of foreign government loans in the fiscal year must be within the approved annual budget for foreign government loans from the central budget.

2. In case the competent authority approves a loan policy and an unforeseen loan arises that is not included in the initial budget or exceeds the approved annual budget for foreign government loans, the Ministry of Finance shall submit to the competent authority a request to supplement the budget for foreign government loans from the central budget in accordance with the laws on state budget management.

Article 13. Preparation and Decision on Allocation of Central Budget Revenue from Recovery of Foreign Government Loan Repayments

1. By July 10th each year, based on the signed loan agreements and disbursement and recovery progress of loans, the Ministry of Finance compiles and submits to the Government a budget for central revenue from foreign government loan repayments for the next fiscal year in accordance with Article 47, Article 48, and Article 49 of the Law on State Budget.

2. Based on the National Assembly's resolution on the state budget and central budget allocation, the Prime Minister decides to assign the task of collecting central revenue from foreign government loan repayments to the Ministry of Finance for implementation.

Article 14. Selection of Bank Services

The bank services are selected by the Ministry of Finance among policy banks with experience in lending and recovering debts from foreign governments or lending and recovering debts from overseas investment projects, or state-owned commercial banks where the State holds at least 50% equity to report for approval by the competent authority. In case a commercial bank is selected as the service bank, it must have a credit rating equal to or one level lower than the credit rating of the Vietnamese Government. When selecting a commercial bank as the service bank, the Ministry of Finance coordinates with the State Bank of Vietnam before reporting for approval by the competent authority.

 

Chapter II

PROCEDURE AND PROCEDURAL MATTERS REGARDING FOREIGN GOVERNMENT LOAN EVALUATION, NEGOTIATION, SIGNING, AMENDMENT, SUPPLEMENTATION, AND EXTENSION OF LOAN AGREEMENTS

 

Article 15. Request for Foreign Government Loan

When there is a need to borrow funds, the foreign government shall submit an official letter to the Vietnamese Government requesting permission to borrow funds. The request for borrowing includes the following main contents:

1. Purpose of borrowing.

2. Estimated value of borrowing.

3. Borrowing utilization plan.

4. Repayment plan for borrowed funds.

5. Budgetary revenue and expenditure data; public debt, national debt, and other macroeconomic data necessary in the three most recent years of the requesting foreign government.

6. Project loan file (in case of project-based lending).

Article 16. Report on Evaluation of Foreign Government Loan Request

Based on the request for borrowing from the foreign government as stipulated in Article 15 of this Decree, the Prime Minister assigns the Ministry of Finance to take the lead and coordinate with the Ministry of Foreign Affairs, the State Bank of Vietnam, and relevant agencies to study and prepare an evaluation report on the loan request from the foreign government; the report is submitted to the Government for review by competent authorities regarding the approval of the foreign government loan. The process, seeking opinions, and preparation of the evaluation report on the foreign government loan request are as follows:

1. Within five working days from the date of receiving instructions from the Prime Minister to evaluate the foreign government's borrowing request, the Ministry of Finance sends a letter requesting comments from relevant agencies regarding the foreign government's borrowing request.

a) In cases where the foreign government requests a loan under the terms specified in paragraph 1 of Article 7 of this Decree, the Ministry of Finance seeks opinions from the Ministry of Foreign Affairs, the State Bank of Vietnam, and the specialized management department concerning the project to be financed regarding the borrowing request along with the project file (in case of loans for project implementation). The agencies requested shall provide written responses to the Ministry of Finance within five working days from the date they receive the letter and the loan application documents;

b) In cases where the foreign government requests a loan under other terms specified in paragraph 2 of Article 7 of this Decree, the Ministry of Finance seeks opinions from the Ministry of Foreign Affairs and the State Bank regarding the borrowing request. The agencies requested shall provide written responses to the Ministry of Finance within five working days from the date they receive the letter and the loan application documents.

2. Within five working days from receiving full comments from relevant agencies, the Ministry of Finance prepares an evaluation report on the foreign government's borrowing request for submission to the Government for review. The evaluation report on the foreign government's borrowing request includes the following main contents:

a) The necessity of borrowing by the Vietnamese Government for the economic and social development of the recipient country;

b) The effectiveness of the purpose of borrowing (the effectiveness, impact of the project formed from borrowed funds on the economic and social development of the recipient country; the effectiveness of imported goods and equipment from borrowed funds...);

c) Financial conditions of the loan including currency for borrowing, value of borrowing, term, interest rate;

d) The ability to meet the borrowing requirements of the central budget in terms of financial conditions and other conditions of the loan;

d) The ability of the foreign government to repay debts;

e) Evaluation of risks arising from lending;

g) Selected bank (if necessary, a serving bank must be selected);

h) Recommendations by the Ministry of Finance.

3. Based on the evaluation report on the foreign government's borrowing request submitted by the Ministry of Finance, the Government assigns the Minister of Finance to act on behalf of the Government and prepare an evaluation report on the foreign government's borrowing request for submission to competent authorities for approval. The evaluation report on the foreign government's borrowing request includes the following main contents:

a) The necessity of borrowing by the Vietnamese Government for the economic and social development of the recipient country;

b) The effectiveness of the purpose of borrowing (the effectiveness, impact of the project formed from borrowed funds on the economic and social development of the recipient country; the effectiveness of imported goods and equipment from borrowed funds...);

c) Financial conditions of the loan including currency for borrowing, value of borrowing, term, interest rate;

d) The ability to meet the borrowing requirements of the central budget in terms of the value of borrowing, financial conditions, and other conditions of the loan;

d) The ability of the foreign government to repay debts;

e) Evaluation of risks arising from lending;

g) Selected bank (if necessary, a serving bank must be selected);

h) Recommendations by the Government.

Article 17. Procedure and Process for Negotiation, Signing, Amendment, Supplement, and Extension of Loan Agreement

1. Drafting and Negotiation of the Loan Agreement

a) Based on the approval by the competent authority for foreign government loans, the Prime Minister assigns the Ministry of Finance to take the lead in coordinating with the Ministry of Foreign Affairs, Ministry of Justice, State Bank of Vietnam, and relevant agencies to draft the loan agreement according to the financial conditions and other terms of the loan that have been approved by the competent authority and negotiated with the borrower;

b) Within five working days from the date of receiving instructions from the Prime Minister to draft the loan agreement and negotiate with the borrower, based on the approval for foreign government loans by the competent authority, the Ministry of Finance drafts the loan agreement and seeks comments from the Ministry of Foreign Affairs, Ministry of Justice, State Bank of Vietnam, and relevant agencies. The content of the loan agreement includes the following basic contents:

Loan amount;

Currency of the loan;

Financial conditions of the loan (term, interest rate, late payment interest);

Other terms of the loan;

Disbursement process and repayment of borrowed funds;

Rights and obligations of the lender and borrower;

Borrower's commitments;

Provisions for suspension of disbursements;

Procurement provisions;

Dispute resolution provisions;

Provisions on the effectiveness of the loan agreement.

c) Within five working days from receiving all the documents requested by the Ministry of Finance, relevant agencies provide written comments to the Ministry of Finance regarding the draft loan agreement.

2. Procedure and process for negotiation, signing, amendment, supplement, and extension of the loan agreement shall be carried out in accordance with the provisions of the Law on International Treaties.

 

Chapter III

DISBURSEMENT AND RECOVERY OF LOAN FUNDS

 

Article 18. Disbursement of Loan Funds

1. For loans implemented through disbursement and recovery procedures as stipulated in paragraph 1 of Article 7 of this Decree:

a) After the loan agreement is signed and becomes effective, the Ministry of Finance opens an account for borrowed funds named "Ministry of Finance - Loan Agreement Number... (according to the loan agreement number)" at the bank serving as the disbursement agent. Once the account is opened, the Ministry of Finance transfers the loan amount according to the agreed disbursement schedule into the aforementioned account to disburse the loan funds to the borrower;

b) Based on the provisions for disbursement in the loan agreement and upon the request of the borrower, the disbursement agent disburses the loan funds from the loan account into the designated receiving account of the borrower and notifies the Ministry of Finance of the disbursement.

2. For loans implemented through disbursement and recovery procedures as stipulated in paragraph 2 of Article 7 of this Decree:

a) After the loan agreement is signed and becomes effective, the Ministry of Finance opens an account for borrowed funds named "Ministry of Finance - Loan Agreement Number... (according to the loan agreement number)" at the State Treasury. Once the account is opened, the Ministry of Finance transfers the full committed loan amount according to the loan agreement into the aforementioned account to disburse the loan funds to the borrower;

b) Based on the provisions for disbursement in the loan agreement and upon the request of the borrower, the Ministry of Finance disburses the loan funds from the loan account into the designated receiving account of the borrower.

Article 19. Recovery of Loan Capital

The borrower shall be responsible for repaying the debt to the lender in accordance with the provisions of the loan agreement. The account for receiving repayment payments is specified in the loan agreement.

Article 20. Budget Accounting for Foreign Government Loans

1. Expenditures for disbursed loans during the fiscal year shall be accounted for and settled into the central budget item for loan expenditures.

2. Revenue from recovery of debt (principal, interest, late payment interest if applicable) is accounted for as revenue in the central budget (revenue from lending).

Article 21. Surplus Capital and Handling of Surplus Capital

1. In case the value of the loan capital on the loan account has not been fully disbursed within the disbursement period specified in the loan agreement, unless otherwise agreed between the lender and the borrower, any remaining amount shall be returned to the central budget of the lender within fifteen working days from the date both parties agree that the surplus capital will no longer be utilized.

2. The use of surplus capital on the loan account is applicable in cases where the borrower has a need to utilize the surplus capital to enhance the effectiveness of the project utilizing the loan, as specified in paragraph 1 of Article 5 of this Decree, or for importing additional goods and equipment with the same purpose as those already imported using the loan capital to meet the needs of the borrower, as specified in paragraph 2 of Article 5 of this Decree.

3. Procedures and formalities for utilizing surplus capital

a) In case the borrower has a need to continue utilizing the surplus capital on the loan account, the borrower shall submit a written request for utilization of surplus capital to the lender along with the following documents:

Documentation explaining the withdrawal and use of the loan;

Documentation explaining the necessity of utilizing the surplus capital.

b) Within five working days from receipt of the borrower's request for utilization of surplus capital, the Ministry of Finance shall issue a letter seeking the opinion of the Ministry of Foreign Affairs, the Bank in cases where disbursement and recovery of debt are conducted through the Bank serving as intermediary.

c) Within five working days from receipt of the Ministry of Finance's request for opinions, the agencies mentioned in paragraph 1 point (a) of this Article shall respond to the Ministry of Finance regarding the borrower's request for utilization of surplus capital.

d) Within five working days from receipt of the relevant authorities' opinions, the Ministry of Finance shall submit a report to the Prime Minister for examination and decision on the borrower's request for utilization of surplus capital.

d) Within five working days from receipt of the Prime Minister's instructions regarding the borrower's request for utilization of surplus capital, the Ministry of Finance shall issue a letter to the borrower with the formal response from the lender regarding the borrower's request for utilization of surplus capital.

Article 22. Suspension of Disbursements

1. In case any of the following situations arise, the Ministry of Finance shall notify the borrower. If such situation persists continuously for sixty days from the date of notification by the Ministry of Finance, the Ministry of Finance shall report to the Prime Minister for approval to suspend disbursement of loan capital and simultaneously propose risk management measures in accordance with the procedures and formalities specified in Articles 24, 25, 26, and 27 of this Decree.

a) The borrower fails to make full and timely payment of any principal or interest, fees as per the loan agreement;

b) The borrower fails to fulfill any term, condition, commitment, or agreement under its obligations as per the loan agreement;

c) Special circumstances beyond the control of the lender (including war, civil war, earthquake, flood...) that are not remediable and affect the borrower's ability to perform its obligations as per the loan agreement.

2. Specific provisions regarding the lender suspending disbursements to the borrower are stipulated in the loan agreement.

 

Chapter IV

WORKING CAPITAL MANAGEMENT AND FOREIGN GOVERNMENT LOAN MONITORING AND REPORTING SYSTEMS

 

Article 23. Working Capital Management and Foreign Government Loan Monitoring and Reporting Systems

1. The borrower shall be responsible for submitting a regular report every six months to the lender regarding the management, utilization, and repayment of the loaned capital in accordance with specific provisions set forth in the loan agreement.

2. Twelve months after the disbursement of the first tranche of the foreign government loan as per the loan agreement, the Ministry of Finance shall, in conjunction with the Ministry of Foreign Affairs (if applicable) and the Service Bank (if applicable), organize an evaluation and monitoring of the borrower's utilization of the capital and report to the Prime Minister on the usage, repayment status, and any arising issues that require resolution.

3. The annual use and repayment of the loaned capital shall be subject to independent auditing. The audit report shall be submitted by the borrower to the lender. The cost of the audit is borne by the borrower.

Chapter V

 

FOREIGN GOVERNMENT LOAN RISK MANAGEMENT

Article 24. Principles for Determining Risk Levels and Managing Risks

 

The determination of risk levels and management of risks associated with foreign government loans shall adhere to the following principles:

1. Ensuring maximum recovery of debt for the central budget.

2. Timely identification and accurate assessment of emerging risks.

3. Risk management measures within the financial capacity of the lender.

Article 25. Risk Levels

1. Temporary Risks

Foreign government loans are deemed to have temporary risk in cases where there is an overdue payment from one to three repayment periods but not exceeding eighteen months.

2. Severe Risks

Foreign government loans are deemed to have severe risks in cases where there is an overdue payment from four to six repayment periods but not exceeding thirty-six months.

3. Risk Leading to Loss of Repayment Capacity

Foreign government loans are deemed to have a risk leading to loss of repayment capacity in cases where there is an overdue payment beyond six repayment periods.

Article 26. Forms of Risk Management

Depending on the level of risk, forms of risk management include:

1. Extension of Debt: applicable for foreign government loans with temporary risks as specified in Clause 1 of this Decree.

2. Write-off of Debt: applicable for foreign government loans with severe risks as specified in Clause 2 of this Decree.

3. Special Forms of Management: applicable for foreign government loans with a risk leading to loss of repayment capacity as specified in Clause 3 of this Decree. Among the special forms of risk management, priority shall be given to restructuring measures aimed at preserving the value of the loaned capital, including forms agreed upon and negotiated with the borrower such as converting debt into equity contributions in infrastructure projects, or converting debt into rights to exploit natural resources or commercial rights of Vietnamese enterprises in the recipient country.

Article 27. Risk Management Procedures and Authority

1. In cases where foreign government loans have temporary risks as specified in Clause 1 of this Decree:

a) After exchanging views with the borrower to clarify the causes of risk and proposed solutions, if the Ministry of Finance directly disburses and recovers the debt or based on reports from the Service Bank and results of exchanges between the Ministry of Finance and the borrower regarding the causes of risk and proposed solutions in cases where disbursement and recovery are conducted through the Service Bank, the Ministry of Finance shall report to the Prime Minister on the aforementioned content for recommendations on appropriate handling;

b) Based on the reports from the Ministry of Finance, if the borrower encounters temporary difficulties due to objective factors such as natural disasters or economic conditions temporarily adversely affecting their repayment capacity, the Prime Minister may consider and decide to extend the debt for the borrower.

2. In cases where foreign government loans have severe risks as specified in Clause 2 of this Decree:

a) After exchanging views with the borrower to clarify the causes of risk and proposed solutions, if the Ministry of Finance directly disburses and recovers the debt or based on reports from the Service Bank and results of exchanges between the Ministry of Finance and the borrower regarding the causes of risk and proposed solutions in cases where disbursement and lending are conducted through the Service Bank, the Ministry of Finance shall report to the Government on the aforementioned content for recommendations on appropriate handling;

b) Based on the reports from the Ministry of Finance, if the borrower encounters severe difficulties due to objective factors such as natural disasters or economic conditions temporarily adversely affecting their repayment capacity, the Government delegates the Ministry of Finance to report to competent authorities for consideration and decision on debt write-off for the borrower.

3. In cases where foreign government loans have a risk leading to loss of repayment capacity as specified in Clause 3 of this Decree, the Ministry of Finance shall report to the Government for reporting to competent authorities for consideration and decision on handling risks through special forms of management.

3. In the event that the foreign government loan has risks leading to a loss of repayment capacity as provided in Clause 3, Article 25 of this Decree, the Ministry of Finance reports to the Government for reporting to the competent authority to consider and decide on handling the risk in a special form.

 

Chapter VI

DUTIES, POWERS, AND RESPONSIBILITIES OF THE AUTHORITIES AND ORGANIZATIONS IN MANAGING FOREIGN GOVERNMENT LOANS

 

Article 28. Duties of the Ministry of Finance

1. The Ministry of Finance is the principal authority assisting the Government in unified management of state affairs related to foreign government loans from the central budget; it shall be responsible for guiding, inspecting, and supervising the implementation of this Decree's provisions and relevant laws within its scope of state management.

2. It shall be responsible for drafting, preparing, submitting for approval or issuing according to its authority regulations, strategies, financial policies, and mechanisms concerning foreign government loans from the central budget; it shall also propose principles, directions, conditions, criteria for selecting loan recipients, interest rates, terms, limits, and measures to manage financial risks during the implementation, issuance, and execution of the accounting procedures for loans and recovery of debts related to foreign government loans.

3. It shall be responsible for reporting annually to the Prime Minister, Government, and relevant authorities on the budget loan forecasts for foreign governments. In case the authority approving the foreign government loan exceeds the budget forecast approved by the National Assembly, it shall report to the Prime Minister to decide on using the central budget contingency fund for the foreign government loan.

4. It shall receive and coordinate with relevant agencies in preparing a report on the request for foreign government loans and submit it for approval.

5. It shall be responsible for drafting the loan agreement, negotiating, signing according to the Government's authorization, managing, and supervising the implementation of the loan agreement; directly disburse funds when the Ministry of Finance directly disburses to the borrower or cooperate with the bank in disbursing loan funds where the borrowed funds are disbursed through a bank serving as an intermediary for repayment.

6. It shall be responsible for opening, managing, and controlling the loan account for foreign government loans from the state budget.

7. It shall organize evaluations and supervision of the use of loan funds by the borrower; it shall propose measures to address violations or risks during implementation.

8. It shall compile and report regularly and on an ad hoc basis to the Government, Prime Minister, and other relevant authorities (as required) on the status of loans, debt recovery, risk management, inspection results, supervision outcomes, and proposed management measures.

9. It shall select a bank for performing payment, disbursement, debt recovery, and loan account management services for foreign government loans from the state budget.

10. It shall be responsible for coordinating with the serving bank (where applicable) to determine any remaining loan funds after the disbursement period ends; it shall notify the borrower of the use of excess funds following the procedures and formalities stipulated in Clause 3, Article 21 of this Decree.

11. It shall settle the total source of loan funds for foreign government loans from the state budget annually as allocated and actually utilized according to the forecasted budget.

Article 29. Duties and Powers of the Ministry of Foreign Affairs

1. To cooperate with the Ministry of Finance and relevant agencies in developing strategies, policies, and financial mechanisms for foreign government loans from state budget funds.

2. To cooperate with the Ministry of Finance in determining the borrowing needs of friendly foreign governments traditionally related to Vietnam, providing information for budgetary forecasting purposes.

3. To provide comments on the principle of signing loan agreements, offer opinions on their content, review draft loan agreements, and carry out relevant diplomatic procedures concerning the signing, amendment, supplementation, or extension of loan agreements between the Government of Vietnam and foreign governments in accordance with regulations.

4. To cooperate with the Ministry of Finance in monitoring and supervising the implementation of loans.

5. To direct Vietnamese agencies stationed in countries receiving loans to coordinate in providing information on the implementation of loan agreements in those countries; to monitor economic and financial conditions, as well as the debtor's ability to repay, promptly report to the Ministry of Foreign Affairs, and alert the Ministry of Finance to risks for consolidation and handling within their authority.

Article 30. Duties and Powers of the Ministry of Justice

1. To review the legal validity of loan agreements between the Government of Vietnam and foreign governments in accordance with laws on the conclusion, accession, and implementation of international treaties.

2. To provide comments to the Ministry of Finance during negotiations and signing of loan agreements when requested by the Ministry of Finance.

3. To cooperate with the Ministry of Finance, Ministry of Foreign Affairs, and relevant agencies in addressing legal issues arising from the implementation of loan agreements or international disputes (if any).

Article 31. Duties and Powers of the Ministry of Public Security

1. To provide comments to the Ministry of Finance on the security, defense, social order and safety impacts of foreign government borrowing proposals.

2. To cooperate with the Ministry of Finance in evaluating the impact of projects proposed by foreign governments for loans from the Government of Vietnam.

3. To prevent, detect, investigate, and handle abuses of foreign loan policies that violate laws.

Article 32. Duties and Powers of the Ministry of Defense

1. To provide comments to the Ministry of Finance on the security, defense, social order and safety impacts of foreign government borrowing proposals.

2. To cooperate with the Ministry of Finance in evaluating the impact of projects proposed by foreign governments for loans from the Government of Vietnam.

Article 33. Duties and Powers of the State Bank of Vietnam

1. To provide comments to the Ministry of Finance on foreign government borrowing proposals.

2. To assist in providing monetary policy information to enable the Ministry of Finance to determine appropriate loan conditions.

3. To cooperate in transfer and international payment operations, ensuring foreign exchange safety and compliance with Vietnam's foreign exchange management regulations.

4. To provide comments to the Ministry of Finance on selecting commercial banks for service provision.

Article 34. Duties and Powers of Sectoral Ministries

1. To participate in consultations with the Ministry of Finance when requested about foreign government borrowing proposals related to projects or importation of goods or equipment under their jurisdiction.

2. To cooperate with the Ministry of Finance in monitoring and supervising the use of foreign government loan funds for project implementation or importation of goods or equipment under their jurisdiction.

Article 35. Duties and Powers of the Bank in Serving

1. To perform banking operations on behalf of the Ministry of Finance related to disbursement, debt collection, fund transfer, and other transactions as per the Loan Agreement.

2. To open and manage loan capital accounts and related accounts pursuant to instructions from the Ministry of Finance; to ensure accurate and transparent accounting.

3. To submit periodic reports every six months or immediate reports upon occurrence of events affecting the recovery of loan capital, or when required to report on disbursement, debt collection, outstanding balance, interest, fees, and related occurrences.

4. To fulfill confidentiality obligations, maintain records, and cooperate in financial supervision activities by the Ministry of Finance and competent authorities.

5. To charge service bank fees as stipulated in Clause 17 of this Decree.

6. Specific responsibilities and powers of the Bank in implementing the loan agreement are defined in the Authorization Contract signed between the Ministry of Finance and the Serving Bank according to the Model attached as Appendix II to this Decree.

 

Chapter VII

TERMS OF IMPLEMENTATION

 

Article 36. Transitional Provisions

1. Loan agreements already entered into and effective shall continue to be implemented in accordance with the provisions of the Agreements, Loan Agreements signed between the Government of the Socialist Republic of Vietnam and the borrowing government.

2. Amendments, supplements, or extensions of loan agreements currently in effect as of the date this Decree comes into force shall be carried out in accordance with the procedures and formalities stipulated in Article 17 of this Decree.

Article 37. Implementation Terms

This Decree takes effect from the date of issuance.

 

 

HO DUC PHOC

Appendix I
MODEL REPORT ON THE MANAGEMENT, UTILIZATION, AND REPAYMENT OF LOAN FUNDS

ACCORDING TO THE LOAN AGREEMENT
(Accompanying Decree No. 118/2026/NĐ-CP

 

 

 

Hanoi, Date: … Month … Year …

 

To:

Ministry of Finance.

In accordance with the provisions of Clause ___Article ___Decree No. ___of the Government on borrowing from the national budget for foreign governments, this Bank hereby reports to the Ministry of Finance periodically during the period from Date ___ to Date ___ regarding the management, utilization, and repayment according to Loan Agreement No. ___ signed between the Government of the Socialist Republic of Vietnam and the government of ____, as follows:

I. Outstanding Balance, Disbursement, and Repayment

1. Outstanding balance at the beginning of the period:

2. Overdue balance at the beginning of the period:

- Principal overdue

- Interest overdue

- Late interest

3. Disbursement during the period

4. Repayment during the period

- Repayment of principal due:

- Repayment of principal:

- Repayment of interest due:

- Repayment of interest:

5. Outstanding balance at the end of the period:

6. Overdue balance at the end of the period: II. Management and Utilization of Loan Funds by the Borrower, Supervision by the Serving Bank

Analysis of reasons for incomplete or late repayment by the borrower (if any occurred during the reporting period)

 

III. Recommendations for Handling

 

LEADERSHIP OF THE SERVING BANK

Appendix II

MODEL AUTHORIZATION CONTRACT BETWEEN THE MINISTRY OF FINANCE AND THE SERVING BANK
(Accompanying Decree No. 118/2026/NĐ-CP

 

of the Government dated April 3, 2026)

THE SOCIALIST REPUBLIC OF VIETNAM

_______________________

Independence - Freedom - Happiness

 

AUTHORIZATION CONTRACT

In accordance with Decree No. /2026/NĐ-CP of the Government dated Month Year 2026 on borrowing from the central budget for foreign governments (hereinafter referred to as the Decree);and in accordance with Loan Agreement No. ___ signed on Date ___ between the Government of the Socialist Republic of Vietnam and the government of ____ [Borrowing Government]

____ (hereinafter referred to as the Loan Agreement),

Article 1. The Ministry of Finance is authorized to entrust the __ Bank as the Service Bank for the purpose of disbursing and recovering loans in accordance with the Loan Agreement ___ (hereinafter referred to as the Service Bank).

Article 2. Responsibilities of the Ministry of Finance

(as provided by Decree and Loan Agreement)

Article 3. Responsibilities of the Service Bank

(as provided by Decree and Loan Agreement)

Article 4. Service Bank Fees

The Service Bank shall be entitled to receive service fees from the ___ Government[Borrowing Country Government] as stipulated in Clause 17 of Article 3 and Clauses 4 of Article 8 of the Decree.

Article 5. Enforceability

This agreement was signed on __ and shall be effective from the date of signing until the Service Bank completes its responsibilities as provided in Article 3 of this mandate agreement.