Circular No. 17/TC-TCĐN guiding the preparation of plans for foreign borrowing and repayment by the Government

CIRCULAR

Guidelines for the preparation of plans for foreign debt repayment and borrowing by the Government

Pursuant to Article 3 of the Regulation on Management of Foreign Borrowing and Debt Repayment issued together with Decree No. 58/CP dated August 30, 1993 of the Government, the Ministry of Finance provides guidelines for the preparation of plans for foreign borrowing and debt repayment by the Government as follows:

I. SCOPE OF APPLICATION

Foreign borrowing by the Government within the scope of guidance of this Circular includes loans borrowed and committed to fulfill obligations abroad by the Government, or loans borrowed by the Government and entrusted to enterprises with guarantees from the Ministry of Finance (or the State Bank) (hereinafter referred to collectively as loans of the Government). These loans include short-term, medium-term, and long-term loans (with interest or without interest), guarantees, and other forms of borrowing (such as deferred payment agreements or new loans to repay old ones) with foreign creditors.

The sources of foreign borrowing by the Government include funds borrowed from international financial and monetary organizations and governments. For these sources, ministries, sectors, localities, and enterprises may not agree upon or sign loan agreements if they have not been authorized by the Government.

The Ministry of Finance is the lead agency of the Government responsible for managing the financial aspects of the use of borrowed funds and foreign debt repayment by the Government.

II. GENERAL PROVISIONS ON MANAGEMENT OF FOREIGN BORROWING AND DEBT REPAYMENT BY THE GOVERNMENT

AND FOREIGN DEBT REPAYMENT OF THE GOVERNMENT.

1. All foreign borrowing and debt repayment by the Government must be centrally managed through the Ministry of Finance.

2. The use of foreign borrowed funds and the repayment of foreign debts by the Government shall be balanced in the annual state budget revenue and expenditure plan.

3. The Ministry of Finance is responsible for reviewing and compiling the total limit plan for foreign borrowing and debt repayment by the Government, consulting the opinions of relevant government agencies, and submitting it for approval by the Prime Minister along with the annual state budget revenue and expenditure plan.

III. PREPARATION OF THE TOTAL LIMIT PLAN FOR FOREIGN BORROWING AND DEBT REPAYMENT BY THE GOVERNMENT

OF THE GOVERNMENT.

1. Planning Objectives. Classified according to purpose, nature, and method of fund utilization as follows:

a) Loans from the Government for use in national investment construction projects according to the state plan:

For infrastructure, social welfare, and other projects that cannot directly recover costs, the Ministry of Finance manages and allocates construction capital from the state budget according to the current investment construction capital management system.

For projects capable of recovering costs (including infrastructure projects), the Ministry of Finance will coordinate with the State Bank to implement lending to enterprises.

b) Loans for state budget needs (in cash or in kind) are implemented according to the current state budget capital management system. State budget loans include those borrowed by the Government and entrusted to enterprises to borrow on behalf of the state budget.

c) Loans of enterprises not authorized by the Government but guaranteed by the Government are implemented according to the Regulation on Guarantees for Foreign Borrowing of the Government issued under Article 20 of Decree No. 58-CP dated August 30, 1993.

2. Basis for Plan Construction.

The annual total limit plan for foreign borrowing is built based on actual needs for using foreign borrowed funds in the planning year, mainly determined by the following bases:

Loans for projects already signed in foreign loan agreements and contracts (signed by the Government or entrusted to enterprises with government guarantees).

Needs for foreign loans for planned investment construction projects expected to start from the planning year with foreign partners but without signed loan agreements and contracts.

Balance of state budget revenue and expenditure in the planning year and projected need for foreign loans to offset budget deficits.

Ability to repay foreign debts in the planning year.

3. Procedure for Preparing and Approving the Foreign Borrowing Plan.

a) Loans for investment construction projects from the Government's borrowing sources.

a.1. For projects with foreign partners but without signed loan agreements and contracts:

Ministries, sectors, and localities guide subordinate units to prepare basic construction projects requiring foreign loans in accordance with the current Basic Construction Management Regulations, then review and consolidate them to report to the National Planning Commission, the Ministry of Finance, and the State Bank for examination and inclusion in the comprehensive plan for submission to the Government. These comprehensive plans should be prepared according to the model provided in Appendix 1 of this Circular and submitted simultaneously with the annual state budget plan preparation (no later than September 30 of the year preceding the planning year).

Based on approved construction projects, the National Appraisal Council at various levels during the review process of economic and technical feasibility studies is responsible for comprehensively examining the effectiveness of the project, the need for foreign loans, loan conditions, etc., to approve the economic and technical feasibility study.

After the approved economic and technical feasibility study, ministries, sectors, and localities need to compile and complete the foreign loan application dossier to send to the Ministry of Finance, which includes:

Official loan application of the ministry, sector, or locality managing the project (divided into projects implemented through basic construction capital allocation or domestic re-lending).

Approved economic and technical feasibility study or pre-feasibility project.

Draft foreign loan contract (if the ministry, sector, or locality borrows) or the project owner's application for foreign loan from the Government's loan source (if the Government signs the loan).

Loan method and capital repayment schedule clearly stating the loan usage timeline (or withdrawal) and repayment.

Heads of managing agencies are responsible before the Government for loan applications for projects under their management.

The Ministry of Finance shall coordinate with the State Planning Commission and relevant agencies to examine all loan registration files for each project to submit to the Government for approval to sign loan agreements and contracts, and to decide on the method of using borrowed funds and repaying debts, including:

Projects funded from the State Budget through borrowed capital.

Projects where the State Budget transfers capital to banks for enterprises to borrow again.

Projects partially funded from the State Budget and partially borrowed back through banks.

a.2. Borrowed capital for projects under loan agreements and contracts signed with foreign countries and implemented within the planned year.

Project investors must prepare plans for withdrawing and using capital within the planned year and submit them to the competent ministries, sectors, and localities for consolidation and reporting to the Ministry of Finance. Consolidated reports from ministries, sectors, and localities must be submitted to the Ministry of Finance no later than September 30 of the year preceding the planned year, following the form provided in Appendix 2 attached to this Circular.

b) Borrowed capital for State Budget needs.

If it is foreign currency borrowing for State Budget needs, the Ministry of Finance will directly prepare the plan, seek opinions from relevant agencies, and submit it to the Prime Minister for decision.

If it is borrowing from abroad in goods:

Based on the agreements and contracts signed with foreign countries, the Ministry of Finance will coordinate with the State Planning Commission, the Ministry of Trade, and the competent ministries and sectors to assign central units to import goods for sale and deposit proceeds into the State Budget.

State-owned enterprises assigned tasks must base their plans for collecting and submitting proceeds from selling imported goods into the State Budget on the guidance of the Ministry of Finance and the specific terms of the trade loan contracts they have signed.

In cases where central units receiving goods are permitted by the Ministry of Finance to delay payment for imported materials and goods financed by loans, based on the Ministry of Finance's decision, these units are responsible for preparing plans for collecting payments and settling accounts with the State Budget in a timely manner to ensure compliance with the repayment schedule agreed upon with foreign countries.

All loan agreements and contracts mentioned in points a and b above, if signed by enterprises authorized by the Government, must be submitted to the Ministry of Finance within thirty days from the date of formal signing for registration in the Government’s foreign debt file. If the loan is in the form of goods, a copy must also be sent to the Ministry of Trade for monitoring and management. For ODA loan agreements, the Ministry of Foreign Affairs must send a copy of the original agreement to the Ministry of Finance no later than fifteen days after the authorized agency submits the original agreement to the Ministry of Foreign Affairs for retention according to the ODA management regulations.

c) Borrowing by enterprises not authorized by the Government but guaranteed by the Government.

Guarantees for foreign borrowing by enterprises shall be carried out in accordance with the Government's foreign borrowing guarantee regulations.

In cases of borrowing for basic construction investment (excluding joint venture capital contributions), enterprises must comply with the current procedures for establishing and reviewing basic construction projects.

d) The total borrowing limit plan for enterprises that borrow and repay independently without Government authorization or guarantee, shall be guided by the State Bank to prepare and submit to the Ministry of Finance for consolidation together with the Government's total foreign borrowing limit plan according to the guidance of this Circular, seeking opinions from relevant Government agencies, and submitting to the Prime Minister for decision.

IV. ESTABLISHING THE PLAN FOR REPAYING FOREIGN DEBTS OF THE GOVERNMENT

Annually, based on the foreign debt obligations of the State according to loan agreements and contracts and the capacity of the State Budget, the Ministry of Finance will establish a plan for repaying foreign debts to submit to the Prime Minister for approval and inclusion in the State Budget plan.

For loans to enterprises that borrow from the State Budget through the commercial banking system, the banks designated by the Ministry of Finance and the State Bank to receive foreign loans for onward lending to enterprises are responsible for preparing plans to repay the State Budget loans and submitting them to the Ministry of Finance. These plans are based on the conditions and terms agreed between the Ministry of Finance and the State Bank for each specific foreign loan.

Enterprises using State Budget loans through the rescheduling method are responsible for preparing plans to repay the loans and submitting them to the commercial bank where they conduct transactions in accordance with the provisions of the loan agreement to enable the commercial bank to consolidate the information.

ANNEX 1

LOAN CAPITAL PLAN FOR INVESTMENT PROJECTS

BASIC CONSTRUCTION YEAR OF

MINISTRY (SECTOR, LOCALITY)

(For projects with foreign partners but loan contracts have not yet been signed)

PART A. COMBINED DATA

Among which, focus on the following main items:

Loan conditions and debt repayment (interest rate, loan fee, repayment period, grace period).

Expected withdrawal and utilization of capital over the years.

Other requirements from foreign parties (guarantees, deposits, promissory notes...).

Minister of ...

Chairman of the People's Committee of province, city...

PLAN FOR WITHDRAWAL OF LOAN CAPITAL AND USE FOR INVESTMENT CONSTRUCTION PROJECTS FOR THE YEAR...

OF THE MINISTRY (INDUSTRY, LOCALITY)...

(Signature, stamp)

ANNEX 2

(For projects with signed Agreements, foreign loan contracts)

Agreement, loan

Capital withdrawn

PART A. COMBINED DATA

Among which, focus on the following main items:

Situation of loan capital utilization.

Minister of ...

Chairman of the People's Committee...

1. Annually, no later than September 30, ministries, sectors, localities shall be responsible for reporting the situation of using foreign loan capital for projects under their management and registering plans for borrowing and using capital for the planned year to the Ministry of Finance, the State Planning Commission, and the State Bank of Vietnam.

2. During the implementation of the annual total loan limit plan, if there are any supplements or modifications compared to the approved plan, ministries, sectors, localities must strictly follow the procedures stipulated in this Circular.

3. Periodically or urgently, the Ministry of Finance and the State Bank will coordinate with relevant agencies to conduct inspections and audits of the establishment and implementation of loan and foreign debt repayment plans by enterprises.

4. This Circular takes effect from the date of signature. Ministries, sectors, localities shall immediately implement guidance on the preparation of plans and reports on loan projects for subordinate units in accordance with the spirit of this Circular. Any difficulties encountered during implementation should be promptly reported to the Ministry of Finance for resolution./.

(Signature, stamp)

V. IMPLEMENTATION PROVISIONS

1. Annually, no later than September 30, ministries, sectors, and localities shall be responsible for reporting on the situation of using foreign loans for projects under their management and registering plans for borrowing and using capital for the planning year to be sent to the Ministry of Finance, the State Planning Commission, and the State Bank of Vietnam.

2. During the implementation of the annual total borrowing limit plan, if there are any supplements or modifications compared to the approved plan, ministries, sectors, and localities must strictly follow the procedures stipulated in this Circular.

3. Periodically or unexpectedly, the Ministry of Finance and the State Bank of Vietnam will coordinate with relevant agencies to conduct inspections and audits of the establishment and implementation of foreign borrowing and repayment plans by enterprises.

4. This Circular takes effect from the date of signature. Ministries, sectors, and localities shall immediately implement guidance on the preparation of plans and reports on loan projects for subordinate units in accordance with the spirit of this Circular. In case of any difficulties during implementation, ministries, sectors, and localities are requested to promptly reflect them to the Ministry of Finance for resolution./.