Decision No. 26/2000/QĐ-NHNN7 Issuing Regulations on Building and Managing Annual Total Commercial Foreign Loan Limits for Enterprises.

DECISION OF THE GOVERNOR OF THE STATE BANK OF VIETNAM

Issuing Regulations on Building and Managing Annual Total Foreign Trade Loan Limits for Enterprises

annual total limit for foreign trade loans of enterprises.

 

GOVERNOR OF THE STATE BANK OF VIETNAM

Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated December 26, 1997;

Pursuant to the Decree No. 90/1998/NĐ-CP dated November 7, 1998 of the Government on the Management of Foreign Borrowing and Repayment;

Pursuant to the Government Decree No. 15/CP dated March 2, 1993 on the tasks, powers, and responsibilities for state management of ministries and ministerial-level agencies;

At the proposal of the Head of the Foreign Exchange Management Department,

 

DECISION:

Article 1. The accompanying Decision issues Regulations on Building and Managing Annual Total Foreign Trade Loan Limits for Enterprises.

Article 2. THIS DECISION SHALL TAKE EFFECT 15 DAYS FROM THE DATE OF SIGNATURE.

Article 3. The Director of the Office, Heads of the Exchange Control Department, and Heads of Units under the State Bank of Vietnam are responsible for implementing this Decision.

 

REGULATIONS ON BUILDING AND MANAGING ANNUAL TOTAL FOREIGN TRADE LOAN LIMITS FOR ENTERPRISES

(Issued together with Decision No. 26/2000/QD-NHNN7 dated January 19, 2000)

(Issued together with Decision No. 26/2000/QĐ-NHNN dated January 19, 2000)

of the Governor of the State Bank)

 

PART I

GENERAL PROVISIONS

Article 1.The annual total foreign trade loan limit plan of enterprises is the total amount of foreign currency equivalent to US dollars approved by the Prime Minister for enterprises to conduct foreign borrowing during the year.

Article 2.The construction and management of the annual total loan limit plan shall be based on the following principles:

1. Taking into account the ability to repay debts as well as ensuring other major balances of the national economy;

2. Meeting part of the capital investment needs of enterprises. Utilizing domestic capital resources effectively.

 

Chapter II

BUILDING THE ANNUAL TOTAL LOAN LIMIT PLAN

Article 3. The State Bank of Vietnam shall take the lead and coordinate with the Ministry of Planning and Investment and the Ministry of Finance to build the annual total foreign trade loan limit plan for enterprises to submit to the Prime Minister for approval.

Article 4.The annual total loan limit plan shall be built based on the main bases as follows:

1. The national strategy on foreign borrowing and repayment for each period, developed by the Ministry of Planning and Investment;

2. The annual foreign borrowing and repayment plan of the Government, developed by the Ministry of Finance;

3. The balance of payments, the country's ability to balance foreign currency sources;

4. The need for foreign borrowing and the obligation to repay of enterprises;

5. The actual situation of foreign borrowing and repayment of enterprises in previous years.

Article 5.

1. The annual total loan limit plan shall be divided into two parts as follows:

a/ Short-term foreign borrowing limit;

b/ Medium- and long-term foreign borrowing limit.

2. The annual total loan limit plan shall be calculated according to Appendix 1 of these Regulations.

Article 6.

1. After building the annual total loan limit plan, the State Bank of Vietnam shall compare it with the following evaluation indicators:

a/ The total debt obligations of the planning year compared to the current year's total export value and service turnover shall not exceed 20%;

b/ The total foreign debt of Vietnam in the planning year compared to the planning year's total export value and service turnover shall not exceed 165%;

c/ The total foreign debt of Vietnam in the planning year compared to the planned Gross Domestic Product (GDP) shall not exceed 50%;

d/ Forecast of the balance of payments.

2. In case the annual total loan limit plan constructed does not comply with the indicators prescribed in Clause 1 of this Article, the State Bank of Vietnam shall stipulate and adjust the mechanism and policies for managing the annual total loan limit plan to ensure that the annual total loan limit plan meets the capital needs of the economy while ensuring the ability to repay foreign debt at a safe and appropriate level.

 

Chapter III.

Article MANAGING THE TOTAL LIMIT

Article 7.The management of the annual limit on short-term foreign borrowing shall be based on the following grounds:

1.The conditions for short-term foreign borrowing as prescribed by the Governor of the State Bank of Vietnam during each period, and the provisions set forth in Circular No. 03/1999/TT-NHNN dated August 12, 1999, guiding foreign borrowing and repayment by enterprises;

2.The regulations of the Prime Minister regarding the management of import and export activities during each period;

3.The actual short-term debt balance in each period compared to the approved limit.

Article 8.The management of the annual limit on medium- and long-term foreign borrowing shall be carried out based on the following grounds:

1.The conditions for medium- and long-term foreign borrowing as prescribed by the Governor of the State Bank of Vietnam during each period, and the provisions set forth in Circular No. 03/1999/TT-NHNN dated August 12, 1999, guiding foreign borrowing and repayment by enterprises;

Article 9.The State Bank shall continuously monitor and evaluate the situation of foreign borrowing and debt to timely adjust mechanisms and policies in managing the total limit plan.

Article 10.In special cases, for medium- and long-term foreign borrowings exceeding the approved limit, the State Bank will report to the Prime Minister for consideration and decision.

 

Chapter IV

IMPLEMENTATION

Article 11. The Department of Foreign Exchange Management shall be responsible for:

1.In November of each year, the Department of Foreign Exchange Management shall develop the annual total limit plan to submit to the Governor for submission to the Prime Minister.

2.Monitoring the trends of short-term debt balances and medium- and long-term borrowing amounts, comparing them with the total limit plan and relevant economic indicators to assess, analyze, and propose management policies and mechanisms for timely submission to the Governor of the State Bank for decision-making or reporting to the Governor of the State Bank for submission to the Government for issues beyond the Governor's authority.

3.Keeping statistical records to promptly grasp data and situations.

Article 12.Responsibilities of Departments and Bureaus: The Monetary Policy Department and other Departments and Bureaus established before 1999 of the State Bank shall cooperate with the Department of Foreign Exchange Management in building and managing the annual total limit plan.

2.Foreign exchange management policy

3.Directional planning for socio-economic development during each period and sectoral, territorial planning, focusing on projects eligible for preferential loans and priority needs.

4.Other criteria assessing the ability to repay foreign debt, which the State Bank shall coordinate with the Department of Foreign Exchange Management in building and managing the annual total limit plan.

 

Chapter V

IMPLEMENTING PROVISIONS

Article 13.Any amendments or supplements to the provisions of this Regulation shall be decided by the Governor of the State Bank.

                                                             

ANNEX 1

METHODS FOR CALCULATING THE TOTAL LIMIT

1.Short-term foreign borrowing:

As short-term foreign borrowing mainly serves import purposes and working capital replenishment, with only a small portion used for other purposes, it can be considered that import data serve as parameters to estimate the short-term debt level (including borrowing and guarantees provided by credit organizations operating in Vietnam).

 2.Medium- and long-term foreign borrowing:

a.Foreign borrowing by enterprises with foreign investment:

The need for foreign borrowing by enterprises with foreign investment is objective because the investment projects have been specifically approved regarding the loan component.

             

b.Foreign borrowing by Vietnamese enterprises:

c.Medium- and long-term foreign borrowing limit for enterprises:

HM= K + E_t+1

c) The Reorganization Enterprise Fund at the state-owned holding corporation level is centralized in a separate account of the state-owned holding corporation, managed by the Board of Directors, to support the reorganization and ownership conversion of enterprises under the state-owned holding corporation as stipulated in Article 2 of this Decision and is responsible for settling accounts with the Ministry

HM: Medium- and long-term foreign borrowing limit for enterprises.

K: Medium- and long-term foreign borrowing limit for Vietnamese enterprises.

E_t+1: Medium- and long-term foreign borrowing limit for enterprises with foreign investment in the planned year.