Decree No. 134/2005/NĐ-CP Issuing the Regulation on Management of Foreign Borrowing and Debt Repayment

 

DECREE

Issuing the Regulation on Management of Foreign Borrowing and Debt Repayment

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

WHEREAS, the Law on the State Budget dated December 16, 2002;

Pursuant to the Law on the State Bank of Vietnam dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on the State Bank of Vietnam dated June 17, 2003;

Pursuant to the Law on Credit Organizations dated December 12, 1997 and the Law Amending and Supplementing Certain Provisions of the Law on Credit Organizations dated June 15, 2004;

At the proposal of the Minister of Finance,

DECREE:

Article 1. This Decree promulgates the attached Regulation on Management of Foreign Borrowing and Debt Repayment.

Article 2. This Decree shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Government Decree No. 90/1998/NĐ-CP dated November 7, 1998.

Article 3. The Minister of Finance, Governor of the State Bank of Vietnam, and the Minister of Planning and Investment shall be responsible for implementing and guiding the implementation and monitoring the enforcement of the Regulation on Management of Foreign Borrowing and Debt Repayment issued together with this Decree.

Article 4. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial People's Committees directly under the Central Government, and Heads of relevant agencies shall be responsible for enforcing this Decree.

 

 

REGULATIONS

MANAGEMENT OF FOREIGN BORROWING AND DEBT REPAYMENT
(Issued together with Government Decree No. 134/2005/NĐ-CP dated November 1, 2005)

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Regulation governs foreign borrowing, debt repayment, and management of foreign debt of Vietnam, except for foreign borrowing and debt repayment by Vietnamese individuals residing in Vietnam.

Article 2. Interpretation of Terms

In this Regulation, the following terms shall be understood as follows:

1. Foreign borrowing: refers to loans obtained by residents of one country from non-residents.

2. Foreign borrowing of Vietnam: refers to short-term loans (with a term of up to one year), medium and long-term loans (with a term exceeding one year), with or without interest, borrowed by the State, the Government of Vietnam, and organizations residing in Vietnam (hereinafter referred to as borrowers) from international financial organizations, governments of other countries, organizations and individuals residing abroad (hereinafter referred to as foreign lenders).

3. Residents of Vietnam and non-residents are determined according to current laws on foreign exchange management.

4. Foreign borrowing of the Government: refers to concessional development assistance loans (ODA), commercial loans, export credit, and borrowing from international capital markets (in the form of issuing bonds abroad), undertaken by agencies authorized by the State or the Government of Vietnam on behalf of the State or the Socialist Republic of Vietnam with foreign lenders.

5. Foreign borrowing of enterprises: refers to loans directly obtained by enterprises and economic organizations established and operating under current Vietnamese laws (hereinafter referred to as enterprises) from foreign lenders through self-borrowing and self-responsibility for debt repayment or through issuing bonds abroad or leasing finance from abroad.

6. ODA borrowing: refers to loans that meet the conditions for ODA funds as stipulated in the Government's Regulation on Management and Use of ODA.

7. Commercial foreign borrowing: refers to foreign borrowing of Vietnam that is not ODA borrowing.

8. National foreign debt: refers to the balance of all current debt obligations (excluding contingent liabilities) for principal and interest at a given time of Vietnam's foreign borrowing. National foreign debt includes public sector foreign debt and private sector foreign debt.

9. Public sector foreign debt: includes government foreign debt, foreign debt (if any) of provincial and centrally-administered city authorities, foreign debt of state-owned enterprises, state financial and credit organizations, and state economic organizations (hereinafter referred to as state-owned enterprises) that borrow directly from abroad.

10. Government foreign debt: refers to the balance of all current debt obligations (excluding contingent liabilities) for principal and interest at a given time of the Government's foreign borrowing.

11. Private sector foreign debt: refers to foreign debt of private sector enterprises and economic organizations (hereinafter referred to as private enterprises).

12. Foreign loan guarantee: refers to the commitment of a guarantor agency to foreign lenders regarding full and timely repayment of the borrower (the guaranteed party). In case the borrower (the guaranteed party) cannot repay the debt when due, the guarantor agency will assume responsibility for repaying the debt on behalf of the borrower (the guaranteed party).

13. Government foreign loan guarantee: refers to the Government's commitment, through the Ministry of Finance, to guarantee foreign loans for borrowers.

14. Public sector guaranteed debt: refers to debt where the payment of debt obligations (principal, interest, fees, etc.) is guaranteed by the Government or a public sector organization authorized to provide guarantees (state financial and credit organizations) under current laws.

15. Contingent liability: refers to potential debt obligations that have not yet arisen but may arise if one of the pre-determined conditions occurs (for example, if the guaranteed party cannot repay part or all of the debt obligation, goes bankrupt...).

16. Long-term national debt strategy (shortened as Long-term Debt Strategy): refers to a document setting out objectives, directions, solutions, and policies for managing national foreign debt, developed within the overall strategy for mobilizing investment capital for the economy, consistent with the five-year and ten-year socio-economic development strategies of the country.

17. Medium-term debt management program: refers to a specific document detailing the contents of the Long-term Debt Strategy for a period of three to five years and updated annually, consistent with the framework of economic and financial policies and the medium-term and annual budget targets of the Government.

18. Annual plan for foreign borrowing and debt repayment: refers to an annual document including plans for withdrawing borrowed funds and repaying debt by the Government and debt of organizations in the public sector, and the total limit for commercial foreign borrowing of the country.

19. Managing agency: refers to a ministry-level agency, a ministerial-level agency, or a provincial People's Committee directly under the Central Government.

20. Re-lending agency: is the Ministry of Finance or the agency or organization authorized by the Ministry of Finance to implement the re-lending of government foreign loans, responsible for supervising the use of loan funds, recovering re-lent debts, and receiving re-lending fees as prescribed by law.

21. Re-lending Agreement: is the Re-lending Contract or Supplementary Re-lending Agreement between the re-lending agency and the re-borrower of the government's foreign loans.

22. Re-borrower of the government's foreign loans (referred to as the re-borrower): is the enterprise or organization that enters into the Re-lending Agreement and accepts debt from the re-lending agency. The re-borrower may include:

- Enterprises or organizations that are the project sponsors using the government's foreign loans under the re-lending mechanism;

- Local authorities borrowing the government's foreign loans for local investment projects.

23. Counterpart Funds: are the necessary domestic funds that Vietnam must spend together with foreign loan funds to implement the project.

Counterpart funds can be foreign currency (such as deposits, money for importing machinery and equipment when not using loan funds...) or Vietnamese dong (for surveying, designing, land compensation and clearance, construction, project management, paying taxes as prescribed by law, and insurance premiums...).

Chapter II
STATE MANAGEMENT OF THE NATIONAL FOREIGN DEBT

Article 3. Objectives of Management

1. To meet the requirements of mobilizing capital for various economic sectors at the lowest cost for national development and restructuring the economy according to the directions and the Strategy for Economic and Social Development.

2. To ensure effective management, allocation, and utilization of capital, reduce risks and pressures on national resources (state budget, National Foreign Exchange Reserve Fund), and guarantee the safety of national debt and financial security.

3. To create conditions for enhancing international economic integration.

Article 4. Contents and Principles of Management

1. The Government shall uniformly manage the entire national foreign debt comprehensively, from mobilization, receipt, allocation, utilization, management, monitoring, and supervision through the following tools:

a) Long-term Debt Strategy, Medium-Term Debt Management Program, and Annual Plan on Foreign Borrowing and Repayment approved by the Prime Minister;

b) Appropriate policies, systems, and division of responsibilities among state management agencies as stipulated in this Regulation.

2. The effectiveness of programs and projects utilizing borrowed funds is the top criterion in deciding to borrow foreign funds.

3. To ensure balance between borrowing and repayment capacity, balance of foreign exchange, and other macroeconomic balances over the long term.

4. State administrative agencies, mass organizations, political and social organizations, and occupational organizations at all levels are not permitted to directly borrow abroad except in special cases allowed by current laws or approved by the Prime Minister.

5. All foreign borrowings as prescribed in Clause 2 of Article 2 of this Regulation must be officially registered with the competent authority of the Government after signing, as provided for in Article 6 of this Regulation.

6. In cases where draft borrowing agreements or loan guarantees contain provisions contrary to or not specified in Vietnamese legal regulations, or commitments exceeding their authority, the leading negotiation agency must seek opinions from relevant agencies and report to the Prime Minister for consideration and decision.

7. The signing of foreign borrowing agreements by the Government shall be carried out in accordance with the legal provisions on the conclusion, accession, and implementation of international treaties. In cases where the agreement between the competent authority of Vietnam and the lender contains different provisions, it shall be implemented in accordance with the agreement with the lender.

Article 5. Long-term Debt Strategy, Medium-Term Debt Management Program, Annual Borrowing and Repayment Plan for Foreign Debts

1. The long-term debt strategy includes the following main contents:

a) Evaluation of the current status of foreign debts, the situation and management work of foreign debts in recent times;

b) Objectives, orientations, and a system of indicators regarding borrowing and repayment of foreign debts at the national level and categorized by economic sectors;

c) Solutions and policies for managing foreign debts at the national level;

d) Organization of implementation of the Strategy.

2. The medium-term debt management program includes the following main contents:

a) Evaluation and forecasting of domestic and international capital market conditions, foreign exchange balance, exchange rate fluctuations, and interest rates as the basis for adjusting borrowing and repayment policies for foreign debts appropriately during each period;

b) Balancing the need for foreign borrowing to cover budget deficits and for development investment based on balancing with domestic borrowing sources;

c) Scheme for mobilizing foreign loans in the public sector: loan structure forecast (based on various loan terms such as concessional loans, commercial loans, lenders, markets, currencies borrowed, tenor, and average interest rates according to loan conditions), mechanism for using loan funds (allocation, relending);

d) Forecasting the mobilization of foreign loans from the private sector over the medium term (from 3 to 5 years) and annually;

đ) Evaluation and forecasting of the portfolio of foreign debts in the public sector (currency, average interest rate, average tenor, exchange rate risks) and the state of national foreign debts over the medium term (from 3 to 5 years) and annually;

e) Proposing solutions and plans to handle foreign debts or restructure the debt portfolio of the public sector as necessary to address bad debts and reduce debt obligations.

3. Annual plan on borrowing and repayment of foreign debts includes the following main contents:

a) Situation of annual borrowing and repayment of foreign debts by the country, analysis of the current national debt status according to international standards, assessment of risks and the degree of contingent debt obligations of the state budget;

b) Plan for withdrawing foreign loans and repaying foreign debts in the public sector, including: government debt, debt of enterprises and organizations under the public sector;

c) Total limit of commercial foreign borrowing of the country, including the limit of foreign borrowing of the public sector and forecasting the level of foreign borrowing by the private sector.

Article 6. Allocation of State Responsibilities for Managing Borrowing and Repayment of Foreign Debts

1. The Ministry of Finance, the lead agency of the Government responsible for managing borrowing and repayment of foreign debts at the national level, shall be responsible for:

a) Taking the lead and coordinating with the Ministry of Planning and Investment and the State Bank of Vietnam to build and submit to the Prime Minister for approval the medium-term debt management program and the annual plan on borrowing and repayment of foreign debts based on the consolidation of the government's foreign borrowing and repayment plans, of organizations under the public sector, and the total limit of commercial foreign borrowing of the country;

b) Taking the lead and coordinating with the Ministry of Planning and Investment to build and submit to the Prime Minister for decision the proposal for mobilizing and the plan for using commercial foreign loans of the government when the government has a need for commercial foreign borrowing;

c) Taking the lead and coordinating with the Ministry of Planning and Investment and the State Bank of Vietnam to build and submit to the Prime Minister for issuance the system of national debt monitoring indicators, procedures for collecting, reporting, consolidating, sharing, and publishing information on foreign debts;

d) Organizing negotiations and signing international treaties on borrowing and guaranteeing foreign loans of the government according to the authority or assignment of the Prime Minister;

đ) Officially representing the borrower for specific foreign loans of the state and government;

e) Financial management of foreign loans of the government, including:

- Registering loans;

- Establishing financial management systems, building and issuing regulations for relending domestic foreign loans of the government; guiding and organizing relending of government foreign loans and recovering relending funds; reporting to the Prime Minister the situation of using these funds.

g) Managing government guarantees according to the Regulations on Issuance and Management of Government Guarantees for foreign loans, including:

- Guiding the process of reviewing and issuing government guarantees, assessing the conditions for issuing guarantees and guarantee documents for specific programs and projects submitted to the Prime Minister for decision on guaranteeing; directly issuing government guarantees; organizing the management of government guarantees like government foreign loans;

- Fulfilling the guarantor's obligations to foreign lenders;

- Conducting inspections and supervision of the business operations, fund usage, and repayment of foreign loans of the guaranteed party; applying financial tools and sanctions as prescribed by law to recover the amount paid on behalf of the guaranteed party and related costs.

h) Taking the lead in building and managing the database of foreign debts of the government, the situation of borrowing and repayment of foreign debts of the country; being the focal point for publishing and providing information on the government's borrowing and repayment of foreign debts, and the country's borrowing and repayment of foreign debts as stipulated by law;

i) Ensuring full, timely, and optimal fulfillment of all government foreign debt obligations, including: organizing the repayment of government foreign debts from the state budget; establishing and managing the use of the Foreign Debt Repayment Reserve Fund; building, proposing, and submitting to the Prime Minister for approval and implementing plans to handle debts and restructure government foreign debts when necessary;

k) Implementing tasks assigned by the government in the Regulation on Management and Use of ODA issued by the government;

l) Conducting post-project evaluations for programs and projects using commercial foreign loans of the government and programs and projects using foreign loans guaranteed by the government.

2. The Ministry of Planning and Investment shall have the responsibility:

a) Taking the lead and coordinating with the Ministry of Finance and the State Bank of Vietnam to build and submit to the Prime Minister for approval the long-term debt strategy within the overall strategy for raising funds for the economy.

b) Chair and coordinate with the Ministry of Finance to develop and submit to the Prime Minister for approval the list of programs and projects that are allocated or refinanced entirely or partially from the Government's foreign loans;

c) Coordinate with the Ministry of Finance to establish a system of debt monitoring indicators, the Medium-Term Debt Management Program, the Annual Plan on Foreign Borrowing and Repayment, and monitor macroeconomic indicators related to national foreign debt;

d) Coordinate with the Ministry of Finance to develop procedures for collecting, reporting, summarizing, sharing, and publishing information on foreign debt to be submitted to the Prime Minister for issuance;

đ) Carry out tasks assigned by the Government under the Official Development Assistance Management and Utilization Regulation issued by the Government;

3. The State Bank of Vietnam shall be responsible:

a) To implement state management over foreign borrowing and repayment by enterprises and organizations in the public sector; supervise and monitor private sector foreign borrowing and repayment; guide and inspect foreign loan guarantees provided by commercial banks and other organizations permitted to issue such guarantees under current laws;

b) Chair and coordinate with relevant agencies to develop annual limits on foreign trade borrowing for enterprises and organizations in the public sector, and forecast annual levels of private sector foreign borrowing to be submitted to the Ministry of Finance for inclusion in the total annual limit on foreign trade borrowing for the public sector and the country, to be submitted to the Prime Minister for approval;

c) Chair and coordinate with the Ministry of Finance to manage annual limits on foreign trade borrowing for enterprises and organizations approved by the Prime Minister;

d) Summarize the situation of foreign borrowing and repayment annually by enterprises and organizations in the public sector and the private sector, report to the Prime Minister, and send to the Ministry of Finance for inclusion in the annual summary of foreign borrowing and repayment for the entire country;

đ) Guide and organize the registration of foreign loans by enterprises and organizations in the public sector and the private sector (including government-guaranteed loans);

e) Monitor financial flows related to foreign borrowing and repayment activities to serve the compilation of the balance of payments, monetary policy implementation, and foreign exchange management;

Establish an early warning system for risks arising from corporate sector debt;

h) Coordinate with the Ministry of Finance to establish a system of debt monitoring indicators, the Medium-Term Debt Management Program, and the Annual Plan on Foreign Borrowing and Repayment;

i) Coordinate with the Ministry of Finance to develop procedures for collecting, reporting, summarizing, sharing, and publishing information on foreign debt to be submitted to the Prime Minister for issuance;

k) Carry out tasks assigned by the Government under the Official Development Assistance Management and Utilization Regulation issued by the Government;

4. The Ministry of Justice shall be responsible:

a) Provide legal opinions on legal issues in agreements on foreign borrowing and repayment by the Government, and agreements on Government guarantees before submitting them to the Prime Minister for decision; provide legal opinions when necessary on other legal issues related to foreign borrowing and repayment agreements of domestic enterprises and economic organizations at the request of the borrower and the guarantor agency;

b) Review discrepancies between agreements on foreign borrowing and repayment by the Government and domestic laws; monitor the handling of these issues during the implementation of commitments on foreign borrowing and repayment;

c) In cases where necessary, provide legal opinions on agreements on foreign borrowing and repayment by the Government, agreements on government-guaranteed loans, and provide legal opinions on the legal status of borrowers and guarantor agencies at the request of these agencies;

5. Other relevant agencies: shall be responsible for coordinating with the Ministry of Finance and the State Bank of Vietnam to implement state management over foreign borrowing and repayment according to their functions and authorities and as stipulated in this Regulation.

Article 7. Inter-ministerial Coordination on Foreign Debt Management

Based on the actual requirements of foreign debt management work and the proposal of the Minister of Finance, the Prime Minister may establish an inter-ministerial coordination body for foreign debt management or utilize an existing coordination mechanism that is appropriate to the functions and authorities of the Government as stipulated by law.

Chapter III
FOREIGN DEBT MANAGEMENT FOR THE PUBLIC SECTOR

Article 8. Objective 

Ensuring effective mobilization of capital for investment and development, minimizing costs and risks of capital raising and utilization transactions, ensuring the fulfillment of public sector debt obligations (including direct debt obligations and contingent liabilities) based on strict monitoring of debt obligations, reducing risks to the state budget and maintaining national debt safety.

Section 1
FOREIGN DEBT MANAGEMENT BY THE GOVERNMENT

Article 9. Basic Requirements

1. The borrowing and repayment of foreign debts by the Government must be carried out uniformly according to the principles of national foreign debt management set forth in Article 4 of this Regulation.

2. Allocating borrowed funds appropriately to the intended use, ensuring high efficiency in the use of capital, generating foreign currency and accumulating domestic resources to meet development goals, while ensuring the ability to repay debts.

3. Maximizing the use of concessional loans based on a consideration of effectiveness and cost, prioritizing the use of concessional loan funds for economic and social infrastructure development.

4. Prudently managing commercial foreign borrowing by the Government. Not using commercial foreign borrowing funds for programs or projects without the ability to directly recover capital, or using short-term commercial borrowing funds for long-term objectives, except in special cases approved by the Prime Minister.

5. Implementing measures to restructure debt, rollover debt, borrow new to repay old... and other modern debt management measures based on analyzing the debt portfolio, understanding market conditions to minimize credit, exchange rate, and budgetary cost risks in foreign borrowing and repayment activities.

Article 10. Principles of Management

1. The Minister of Finance is responsible before the Government for the unified management of government foreign borrowing and repayment based on the Long-Term Debt Strategy and the Medium-Term Debt Management Program, monitoring and supervising foreign borrowing and repayment within annual limits and plans, applying appropriate financial policies and tools to ensure a reasonable debt structure, maturity, and total amount, implementing sanctions as prescribed by law to ensure financial discipline in foreign borrowing and repayment management.

2. Local administrative agencies are not permitted to directly borrow from abroad. In cases where authorized by law or granted special permission by the Prime Minister, provincial and centrally-administered city governments may mobilize foreign borrowing funds for investment in infrastructure under their provincial budgets according to the principle: localities develop plans, proactively seek sources of borrowing, coordinate with relevant agencies to negotiate foreign borrowing, seek opinions from the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam on the terms and conditions of borrowing before submitting to the Prime Minister for review and decision through the Government's lending-back mechanism. Localities are responsible for allocating provincial budgets to fully repay debts in accordance with the law.

3. Agencies and organizations receiving and utilizing government foreign borrowing funds or government-guaranteed loans must use the borrowed funds effectively, in accordance with the approved purpose, program content, and project details by the competent authority.

Article 11. Foreign Commercial Loans of the Government

1. Depending on the need for investment capital development, the Government may mobilize foreign commercial loan capital through direct borrowing forms such as financial loans, export credit loans, issuance of government bonds to the international capital market, or other appropriate forms within the annual foreign commercial borrowing limit approved by the Prime Minister.

2. The foreign commercial loan capital of the Government shall only be used for the following purposes:

- To re-lend to national key investment programs and projects requiring import of equipment and technology, with the ability to directly recover costs and repay the loan or

- To refinance the Government's foreign debt according to the principle of ensuring maximum benefit and lowest cost for the state budget.

3. In cases where the Government has a need for foreign commercial loans, the Ministry of Finance shall take the lead and coordinate with the Ministry of Planning and Investment to prepare proposals for mobilizing and using loan capital to be submitted to the Prime Minister for consideration and decision on a case-by-case basis. In cases where government bonds are issued under the name of the State or the Government to borrow funds from the international capital market, the current regulations of the Government on issuing international bonds shall be followed.

Article 12. Financial Mechanism for Using Foreign Borrowed Capital of the Government

1. Programs and projects for infrastructure investment, social welfare, and other projects without the ability to directly recover capital and which are objects of state budget expenditure, including cases where local budgets borrow foreign loans from the central budget to allocate to programs and projects: shall be allocated from foreign borrowed capital according to the mechanism of allocating state budget capital.

2. Programs and projects for development investment with the ability to fully or partially recover capital (including infrastructure projects): shall apply the mechanism of full or partial re-lending and partial allocation from the state budget depending on the recovery capacity.

3. For loans denominated in foreign currency or goods not directly tied to a project:

a) Foreign loans denominated in foreign currency:

- Loans supporting the budget and issuance of international bonds shall be recorded as state budget revenue and transferred to the centralized foreign exchange fund managed by the Ministry of Finance;

- Foreign currency loans supporting the balance of payments shall be sold by the Ministry of Finance to the State Bank of Vietnam to transfer into the foreign exchange reserve fund managed by the State Bank of Vietnam, and the equivalent Vietnamese dong shall be transferred to the state budget;

Foreign currency loans supporting the balance of payments under currency swap agreements (foreign currency swapped from central banks of other countries) shall be managed, used, and responsible for repayment of foreign currency and recovery of domestic currency by the State Bank of Vietnam when due.

- All foreign currency loans shall be used according to specific decisions of the Prime Minister and in accordance with the criteria of the lender.

b) Foreign loans denominated in goods:

- In cases where the loan agreement specifies the domestic user of the goods: the Ministry of Finance shall convert it into Vietnamese dong for recording in the state budget and implement disbursement or re-lending to the users of the goods;

- In cases where the loan agreement specifies the domestic user of the loan denominated in goods: the Ministry of Finance shall organize the importation, auction sale, and deposit of proceeds into the state budget for use according to the provisions of the loan agreement;

- In cases where the loan agreement does not specify the user of the loan: the Ministry of Finance shall organize the importation, auction sale, and deposit of proceeds into the state budget for use according to the decision of the Prime Minister.

Article 13. Rescheduling Government Foreign Loans

1. The Ministry of Finance shall organize the rescheduling of Government foreign loans through authorized organizations such as the Development Support Fund, state-owned commercial banks, and the Social Policy Bank (rescheduling lending agency).

2. The rescheduling lending agency shall be responsible for managing and recovering funds from the rescheduling borrowers to deposit into the Foreign Debt Repayment Reserve Fund, and shall also be entitled to charge rescheduling fees as prescribed.

3. The rescheduling of Government foreign loans shall be carried out under the following main conditions:

a) Rescheduling currency:

- For Government ODA loan sources: the rescheduling borrower may choose the rescheduling currency to be either domestic currency or foreign currency based on their debt repayment capability;

- For Government foreign trade loan sources: the rescheduling borrower must reschedule in the original foreign currency borrowed by the Government, except in special cases decided by the Prime Minister.

b) Rescheduling term: consistent with the repayment period stated in the Feasibility Study Report, Investment Construction Project Report, or Economic-Technical Construction Project Report approved by the competent authority according to the law;

c) Interest rate and rescheduling fee:

- For Government foreign trade loans: the rescheduling interest rate shall be calculated based on the market interest rate, at a minimum equal to the foreign borrowing interest rate, plus foreign borrowing fees and domestic rescheduling service fees;

- For ODA loans: the rescheduling interest rate in domestic currency shall be determined based on the economic sector, taking into account the borrowing currency, loan term, and repayment capacity of the program/project, ensuring fair preferential treatment among similar programs/projects within the same sector. This interest rate includes domestic rescheduling fees and does not exceed the preferential credit interest rate set by the State during each period;

In case the rescheduling borrower requests rescheduling in foreign currency: the rescheduling interest rate in foreign currency shall be the domestic currency rescheduling interest rate applicable to the corresponding economic sector minus the exchange rate risk ratio for each currency, but in all cases it shall not be lower than the foreign borrowing interest rate.

The Ministry of Finance shall draft and submit to the Prime Minister for approval a unified domestic currency rescheduling interest rate framework applicable to various economic sectors. Annually, based on the approved interest rate framework, and considering financial and monetary market fluctuations, the Ministry of Finance shall adjust and announce the rescheduling interest rate.

d) The Ministry of Finance shall determine specific rescheduling conditions and sign a mandate agreement for rescheduling (or sign a sub-loan agreement and a mandate agreement for rescheduling) for each case according to the above framework conditions. In special cases requiring different conditions from the framework, the Ministry of Finance shall report to the Prime Minister for decision.

The Government will not consider allocating capital for programs and projects that fall under the category of rescheduling Government foreign loans but lack the ability to repay according to the rescheduling conditions announced by the Ministry of Finance.

e) Borrower eligibility:

Enterprises and economic organizations of all economic components, if they have feasible investment projects consistent with the investment development catalog and plan approved by the competent authority according to current regulations, have a need to use Government foreign loans, have the ability to repay debts, and have sound financial status, may be considered for rescheduling Government foreign loans.

f) Collateral assets:

Depending on the specific rescheduling borrower, the rescheduling lending agency may require collateral assets to secure the loans, including assets formed from the loan and other assets as prescribed by law.

Article 14. Local authorities borrowing foreign loans on behalf of the Government

In certain special cases permitted by law or approved by the Prime Minister, provincial and centrally-administered city authorities may borrow back foreign loans of the Government (through the Ministry of Finance) to implement local projects and programs if they ensure budget balance for debt repayment. The Chairman of the People's Committee of the province or centrally-administered city shall be the representative of the local authority to sign the Loan Agreement and accept the debt with the Ministry of Finance. The source of debt repayment will come from the local budget.

Article 15. Responsibilities of Borrowers of Foreign Loans on Behalf of the Government

In all cases, the borrower must bear legal responsibility for fully implementing the commitments and obligations to repay debts according to the signed Loan Agreement; regularly and periodically report on the status of the loan, repayment capacity, and all related issues to the supervising agency, the lending agency, and the Ministry of Finance; cooperate and facilitate auditing, inspection agencies in conducting supervision activities on the loan.

Article 16. Responsibilities and Authorities of the Lending Agency

1. The lending agency is responsible for re-evaluating the financial plan of the borrowing program or project, the financial capacity of the borrower, and reporting the results to the Ministry of Finance before signing the Loan Agreement (even when the program or project has already been approved for investment). In cases of designated lending by the Prime Minister, the lending agency does not need to re-evaluate and does not bear credit risk.

2. The lending agency is responsible for recovering all loans timely and fully and returning them to the state budget through the Foreign Debt Repayment Reserve Fund according to the guidelines of the Ministry of Finance.

3. The lending agency has the right to apply necessary measures consistent with current credit regulations and laws to ensure loan recovery and full and timely return to the state budget. In cases where debt cannot be recovered despite applying all measures, the lending agency reports to the Ministry of Finance for appropriate action.

Article 17. Allocation of Counterpart Funds

All programs and projects using foreign loans of the Government must be allocated sufficient and timely counterpart funds.

For programs and projects under grant allocation: the budget level at which the program or project falls will allocate the counterpart funds. Project sponsors and supervising agencies must calculate the full requirement for counterpart funds, prepare annual plans, and submit them to planning and finance agencies for inclusion in the annual state budget.

For programs and projects under the borrowing mechanism (in whole or in part) of the Government’s foreign loans: project sponsors must arrange their own counterpart funds and are prioritized to borrow from state credit sources or the Development Support Fund.

Article 18. Repayment of Foreign Debts of the Government    

Based on the annual state budget plan for foreign debt repayment approved by the Government, the Ministry of Finance organizes the repayment according to the commitments made with foreign lenders in the loan agreements or government guarantees. In necessary cases, the Ministry of Finance leads negotiations with foreign creditors regarding appropriate debt repayment levels, terms, and methods (repayment in cash, goods, export services, or debt conversion, restructuring...).

State budget expenditures for repaying foreign debts for loans and debt repayment on behalf of guaranteed parties are reimbursed from the Foreign Debt Repayment Reserve Fund.

Article 19. Responsibilities for guiding implementation

The Ministry of Finance shall take the lead and coordinate with relevant agencies to develop the Regulations on re-lending foreign loans from the Government according to the provisions set out in Section 1 of Chapter III of these Regulations, and submit them to the Prime Minister for issuance of a decision promulgating the Regulations.

Section 2
MANAGEMENT OF GOVERNMENT GUARANTEES FOR FOREIGN LOANS

Article 20. General Provisions

A Government guarantee is the highest form of guarantee provided by the Socialist Republic of Vietnam for foreign loans.

Article 21. Conditions for Issuing Government Guarantees for Foreign Loans

1. The subject eligible for consideration to receive a Government guarantee (the beneficiary): is a domestic enterprise, economic organization, or credit institution under all forms of ownership that directly enters into a Loan Agreement with a foreign lender on a self-borrowing and self-responsibility basis for repayment to implement investment programs or credit projects; and whose operational status complies with the provisions of Clause 6, Article 22 of this Regulation.

2. Types of programs and projects eligible for consideration to receive a Government guarantee:

a) Programs and key investment projects approved by the National Assembly or the Prime Minister for investment orientation or

b) Programs and projects importing high-tech equipment or producing export goods and services, or programs and projects in priority investment sectors of the State, which have the ability to repay debts or

c) Programs and projects funded by commercial loans accompanying Official Development Assistance (ODA) funds forming a mixed loan package or

d) Programs and projects borrowing from credit institutions that have been appraised by the State Bank of Vietnam and recommended for a Government guarantee.

3. The equity capital of the project sponsor must ensure at least 20% of the total investment capital for the program or project.

4. Commercial foreign loans guaranteed by the Government for programs and projects must be within the annual limit on commercial foreign loans approved by the Prime Minister.

Article 22. Documents Required for Issuing a Government Guarantee Include:

1. A formal request from the foreign lender seeking a Government guarantee.

2. A formal request from the beneficiary to the Prime Minister for a Government guarantee for the foreign loan.

3. Investment decisions, feasibility studies/reports, or construction project reports of the program or project approved by competent authorities in accordance with current regulations, containing information ensuring that the program or project meets the conditions for issuing a Government guarantee for foreign loans as stipulated in Article 21 of this Regulation.

4. Financial plans ensuring the ability to repay the loan, which have been appraised and accepted by the guarantee-granting authority. For financial institution programs and projects, the financial plan must be appraised by the State Bank of Vietnam and recommended for a Government guarantee.

5. Loan agreements and trade contracts already signed and approved by competent authorities in accordance with current regulations (in cases where foreign loans are used to finance trade contracts).

6. Audited financial reports or documents issued by competent authorities confirming that the beneficiary has operated normally and had no losses in the last three consecutive years, and has no overdue domestic or foreign debts. In cases where the beneficiary has not been operating for three years, a commitment letter from the superior management agency ensuring the ability to repay debt, or a financial plan ensuring the ability to repay debt, which has been appraised and accepted by the guarantee-granting authority, is required.

Article 23. Government Guarantee Amount

Loans guaranteed by the Government must have a minimum value equivalent to 10 million USD (except for commercial loans that follow Official Development Assistance (ODA) capital and are provided in the form of blended credit).

Article 24. Guarantee Fee

1. The Ministry of Finance shall specify the specific fee level for each program and project based on the guarantee period and the assessment of risk levels, but not exceeding 1.5% per year calculated on the outstanding loan amount being guaranteed.

2. The guarantee fee shall be paid into the Foreign Debt Repayment Reserve Fund according to the guidelines of the Ministry of Finance to serve as a reserve fund for debt repayment in cases where the guaranteed party is unable to repay the debt.

Article 25. Collateral for Guaranteed Loans

All assets formed from foreign loans guaranteed by the Government shall be used as collateral for the Government's guarantee and shall not be used as collateral for further borrowing from other sources.

Article 26. Obligations of the Guaranteed Party

1. Provide the Ministry of Finance with the application for government guarantee and necessary related documents for the Ministry of Finance to review and propose the Prime Minister to decide on the guarantee.

2. Fulfill the borrower's obligations under the loan agreement and the obligations of the guaranteed party towards the Ministry of Finance according to the Regulations on Issuance and Management of Government Guarantees for Foreign Loans issued pursuant to Article 27 of these Regulations.

3. Regularly and when necessary provide the Ministry of Finance with audited financial reports or confirmed by higher-level state financial management agencies; reports on plans, withdrawal of loan funds, repayment, outstanding debts; reports on the implementation of programs and projects and special situations affecting the implementation of programs and projects and the ability to fulfill payment obligations under the loan agreement.

4. Facilitate the Ministry of Finance to inspect the implementation of programs and projects when necessary.

5. Timely and fully pay the guarantee fee to the Ministry of Finance as stipulated in Article 24 of these Regulations.

Article 27. Responsibilities for Implementation Guidance

The Ministry of Finance shall take the lead and coordinate with relevant agencies to develop the Regulations on Issuance and Management of Government Guarantees for Foreign Loans according to the principles set out in Section 2, Chapter III of these Regulations, and submit to the Prime Minister for issuance of the Regulations.

Section 3
MANAGEMENT OF FOREIGN LOANS AND DEBTS OF STATE ENTERPRISES AND ECONOMIC ORGANIZATIONS IN THE PUBLIC SECTOR

(referred to as state-owned enterprises)

Article 28. Principles and Methods of Management

1. State-owned enterprises may directly borrow foreign capital through self-borrowing and bear full responsibility for repaying foreign creditors according to the conditions agreed upon in the loan agreements.

2. The Government shall not be responsible for foreign debts directly borrowed by state-owned enterprises, except for those loans guaranteed by the Government as specified in Section 2, Chapter III of these Regulations.

3. Long-term and medium-term commercial foreign loans of state-owned enterprises must be within the annual total limit of commercial borrowing approved by the Prime Minister and meet the conditions for long-term and medium-term borrowing prescribed by the State Bank of Vietnam during each period; they must be registered with the State Bank of Vietnam and confirmed by the State Bank of Vietnam, and regularly report to the State Bank of Vietnam on the situation of withdrawing funds, using funds, and repaying debts according to the reporting system prescribed by the Governor of the State Bank of Vietnam.

4. In case state-owned enterprises borrow foreign capital through issuing international bonds: enterprises must prepare an issuance proposal, seek the review opinion of the Ministry of Finance and the State Bank of Vietnam before submitting to the competent authority for approval.

5. Short-term foreign loans of state-owned enterprises must be within the annual total limit of commercial borrowing approved by the Prime Minister and meet the conditions for short-term borrowing prescribed by the Governor of the State Bank of Vietnam for each period.

6. Withdrawal of foreign loans and transfer of foreign debt repayment funds of state-owned enterprises must be conducted through banks operating in Vietnam that are permitted to engage in foreign exchange transactions, except in cases where funds are withdrawn to make direct payments to foreign suppliers. In cases where withdrawals and repayments are made in assets or goods (tangible or intangible) without going through banks, enterprises must report according to the regulations of the State Bank of Vietnam, and when necessary, must obtain the opinion of the relevant state management agency of the industry or sector involved.

7. State-owned enterprises borrowing foreign capital have the obligation to use the borrowed capital for its intended purpose, may not use short-term capital for investment in medium and long-term projects, and must repay the principal and interest according to the commitments in the loan agreement signed with foreign lenders, bearing all risks and responsibilities under the law during the process of implementing the loan and repayment.

8. For medium and long-term loans of state-owned enterprises, banks may only implement withdrawals and transfers of foreign debt repayment funds when the loans have been registered as required.

9. The State Bank of Vietnam shall cooperate with the Ministry of Finance to provide detailed guidance on the management of foreign borrowing and debt repayment by state-owned enterprises to implement the provisions set forth in this Article.

Article 29. Forms of guarantee for loans

1. In cases where foreign lenders require state-owned enterprises to have a government guarantee for their loans, such guarantees shall be implemented in accordance with the provisions set forth in Section 2, Chapter III of this Regulation and the Government Guarantee Issuance and Management Regulation for Foreign Loans.

2. In cases where foreign lenders require a commercial bank or other financial credit organizations to provide a guarantee, the guarantee shall be carried out in accordance with the Foreign Loan Guarantee and Re-guarantee Regulation issued by the Governor of the State Bank of Vietnam.

3. State-owned enterprises borrowing from abroad may seek guarantees from non-residents (commercial banks, financial credit organizations, or foreign companies...), but must ensure that the conditions of the guarantee do not contravene current Vietnamese laws.

4. Banks and organizations permitted to issue guarantees under current laws are the final decision-makers and bear ultimate responsibility for issuing guarantees for state-owned enterprises' foreign loans. In cases where the guaranteed enterprise cannot repay its debt to foreign entities upon maturity, the guarantor agency must assume responsibility for repaying the debt on behalf of the enterprise; simultaneously, it has the right to apply necessary measures consistent with credit regulations and other Vietnamese legal provisions to recover debts repaid on behalf of the enterprise.

5. State-owned enterprises may use assets formed from borrowed funds or other forms of guarantees in compliance with Vietnamese laws to secure foreign loans.

6. For foreign loans without guarantees or collateral, the parties involved in the loan shall negotiate and bear all risks themselves.

Chapter IV
MANAGEMENT OF FOREIGN LOANS AND DEBTS OF PRIVATE SECTOR ENTERPRISES AND ECONOMIC ORGANIZATIONS (REFERRED TO AS PRIVATE SECTOR ENTERPRISES)

Article 30. Principles of management

1. The foreign debts of private sector enterprises are subject to supervision and monitoring by the Government. The agency representing the Government to carry out supervision and monitoring is the State Bank of Vietnam.

2. Private sector enterprises must register their loans with the State Bank of Vietnam after signing the Loan Agreement with foreign entities and must comply with reporting requirements as stipulated by the Governor of the State Bank of Vietnam.

3. Private sector enterprises using foreign loans must fully bear responsibility for repayment according to the provisions in the Loan Agreement, Vietnamese laws, and international legal practices.

4. For medium and long-term loans of private sector enterprises, domestic banks can only withdraw funds and transfer payments to repay foreign debts when the loans have been registered in accordance with the prescribed regulations.

Article 31. Application of public debt management principles

In cases where private sector enterprises' loans are guaranteed by the Government or organizations authorized to issue guarantees within the public sector (state financial/credit organizations...), the management and supervision of these loans shall be carried out in accordance with the provisions set forth in Sections 2 and 3, Chapter III of this Regulation.

Article 32. Responsibility for guiding implementation

The Governor of the State Bank of Vietnam shall provide specific guidance on the procedures for supervising and monitoring foreign loans and debts of the private sector in accordance with the principles outlined in this Chapter.

Chapter V
INSPECTION, SUPERVISION, AND REPORTING ON THE SITUATION OF FOREIGN LOANS AND DEBTS

Article 33. Inspection and Supervision

1. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under the central government shall be responsible before the Prime Minister for inspecting and supervising the receipt and use of foreign loans within their respective areas of management.

2. The Ministry of Finance, the State Bank of Vietnam, the Ministry of Planning and Investment, and the Government Office shall have the responsibility to guide and assist ministries, sectors, and localities in inspection and supervision work, while directly conducting inspections and supervision on the management and use of foreign loans by the government and the fulfillment of obligations by units using foreign loans according to the provisions of loan agreements or rescheduling agreements.

3. The Ministry of Planning and Investment and the competent authorities shall be responsible for implementing inspections and supervision of investment projects or construction works using foreign loans in accordance with current laws on investment and construction management.

Article 34. Reporting System

1. All units receiving and using foreign loans must implement periodic reporting and evaluation systems quarterly, annually, or at any time regarding the situation of withdrawing funds, using loans, and repaying foreign debts to the competent authority, the loan management agency being the Ministry of Finance or the State Bank of Vietnam, the guarantee agency, and the rescheduling agency according to the guidance of these agencies.

2. Ministries, ministerial-level agencies, provinces, and centrally governed cities shall carry out the following comprehensive reports:

a) Comprehensive reports every six months and annually on the situation of borrowing, using loans, and repaying foreign debts of their respective sectors and localities;

b) Reports on the annual budget estimates of ministries and localities, including detailed plans for withdrawing foreign loans, allocating matching funds for programs and projects according to the general schedule for preparing the annual state budget set by the government;

c) Final accounts reports on completed projects put into use from government foreign loans in accordance with current regulations of the state.

3. The Ministry of Finance and the State Bank of Vietnam shall be responsible for compiling and reporting to the Prime Minister the situation of borrowing and repaying foreign debts according to the division of responsibilities stipulated in this Regulation.

Chapter VI
REWARD AND VIOLATION HANDLING

Article 35. Organizations and individuals who achieve outstanding results in debt management shall be rewarded in accordance with the law.

Article 36. The heads of direct management agencies of state-owned enterprises and state credit institutions borrowing foreign loans shall be responsible before the government for the effectiveness of loan projects they approve or propose to competent authorities to approve for borrowing foreign loans.

In cases where economic losses occur due to non-compliance with current regulations on reviewing or assessing investment plans funded by loans, or incorrect decisions on investment policies, the preparer and approver of the plan shall bear legal responsibility depending on the extent of the loss.

Article 37Investors using foreign loans, if unable to repay debts due to subjective reasons such as ineffective use of funds, waste, capital loss, adversely affecting the government's reputation and causing damage to the state budget, shall bear legal responsibility.

Article 38Organizations and individuals violating this Regulation and related legal documents shall be subject to administrative penalties or be required to compensate for damages in accordance with the provisions of the law, depending on the nature and extent of the violation. In cases of serious violations, criminal responsibility shall be pursued./.