Law on Public Debt Management No. 29/2009/QH12

LAW

Public Debt Management

 ________

Pursuant to the Constitution of the Socialist Republic of Vietnam in 1992 as amended and supplemented by Resolution number 51/2001/QH10;

The National Assembly enacts the Law on Public Debt Management.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

1. This Law stipulates public debt management, including borrowing activities, utilization of borrowed funds, repayment, and public debt management operations.

2. Public debt as defined in this Law includes:

a) Government debt;

b) Debt guaranteed by the Government;

c) Local government debt.

Article 2. Applicability

This Law applies to organizations and individuals involved in borrowing activities, utilization of borrowed funds, repayment, and public debt management.

Article 3. Explanation of Terms

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

1. Debt is a sum due for repayment, including principal, interest, fees, and other related costs at a given time, arising from borrowing by entities permitted to borrow under Vietnamese law.

2. Government debt is debt arising from domestic and foreign loans contracted, issued in the name of the State, in the name of the Government, or other loans concluded, issued, or authorized for issuance by the Ministry of Finance according to the law. Government debt does not include debt issued by the State Bank of Vietnam to implement monetary policy during specific periods.

3. Debt guaranteed by the Government is debt of enterprises and financial credit organizations borrowed domestically and internationally, guaranteed by the Government.

4. Local government debt is debt contracted, issued, or authorized for issuance by the People's Committee of provinces and centrally-administered cities (hereinafter referred to as provincial People's Committees).

5. Foreign debt of the country is the total of foreign debt of the Government, debt guaranteed by the Government, and debt of enterprises and other organizations borrowed under the self-borrowing, self-repayment mechanism according to Vietnamese law.

6. Borrowing is the process of creating a repayment obligation through the conclusion and implementation of loan agreements, contracts, or arrangements (hereinafter collectively referred to as loan arrangements) or issuance of debt instruments.

7. Borrower is the borrower party in loan arrangements or the issuer of debt instruments responsible for repaying the lender according to the terms and conditions of loan arrangements or issuance.

8. Borrower of Government loan (hereinafter collectively referred to as borrower) is enterprises, financial credit organizations, and provincial People's Committees that conclude loan arrangements and accept debt from the lending agency to utilize Government loan funds under the loan transfer mechanism.

9. Guaranteed borrower is the borrower guaranteed by the Government. A guaranteed borrower includes the transferee and the lawful assignee of the borrower approved by the guarantor.

10. Short-term loan is a loan with a term of less than one year.

11. Medium- and long-term loan is a loan with a term of one year or more.

12. Foreign borrowing is a short-term or medium- and long-term loan payable with or without interest borrowed by the State, Government, enterprises, and other organizations of Vietnam from foreign governments, regions, international financial organizations, foreign organizations, and individuals.

13. Official Development Assistance (ODA) loan is a loan in the name of the State or Government of Vietnam from sponsors being foreign governments, bilateral aid organizations, intergovernmental organizations, or international governmental organizations with non-repayable elements (preferential components) reaching at least 35% for tied loans and 25% for untied loans.

14. Preferential loan is a loan with more favorable conditions than commercial loans but the preferential component does not meet the criteria of ODA loans.

15. Commercial loan is a loan based on market conditions.

16. Debt instrument is a promissory note, bill of exchange, government bond, treasury bill, and other instruments generating repayment obligations.

17. Government bond is a type of bond issued by the Ministry of Finance to raise funds for the state budget or specific investment projects.

18. Government-guaranteed bond is a bond with a term of one year or more, issued by enterprises to raise funds for designated investment projects according to the Prime Minister's instructions and guaranteed by the Government.

19. Local government bond is a bond with a term of one year or more, issued or authorized for issuance by provincial People's Committees to raise funds for local investment projects.

20. Repayment is the payment of maturing debt, including principal, interest, fees, and other related costs arising from borrowing.

21. Refinancing is borrowing new funds to repay one or more existing debts.

22. Debt restructuring is the execution of operations aimed at changing the terms and conditions of existing debt without creating new repayment obligations.

23. Portfolio debt restructuring is the execution of operations aimed at restructuring each debt in the portfolio, including refinancing, conversion, resale of debt, currency and interest rate swaps, and other operations to reduce repayment obligations and mitigate risks.

24. Debt resolution is the implementation of measures to resolve debt when encountering difficulties in repayment or inability to repay.

25. Loan transfer agency is the Ministry of Finance or financial credit organizations authorized by the Ministry of Finance to execute the transfer of Government foreign loan funds.

26. Government guarantee is the Government's commitment to lenders to fulfill repayment obligations in case the borrower fails to perform or fully perform repayment obligations upon maturity.

27. Contingent liability is a debt obligation that may arise if at least one of the pre-determined conditions occurs.

28. Borrowing limit is the ceiling of net borrowing amount (actual borrowing minus principal repayment) annually.

29. Debt-to-GDP ratio limit is the ceiling of the ratio between debt stock and Gross Domestic Product (GDP) at any given time.

Article 4. Contents of State Management of Public Debt

1. Drafting, promulgating, and organizing the implementation of legal documents on public debt management.

2. Establishing and issuing safe debt indicators, objectives, orientations for mobilizing, utilizing borrowed capital, and managing public debt in each phase; a system of monitoring indicators for government debt, public debt, national foreign debt, and detailed annual borrowing and repayment plans.

3. Organizing the mobilization, allocation, utilization of borrowed capital, and management of public debt in accordance with purpose, effectively, ensuring full fulfillment of debt repayment obligations.

4. Supervising the mobilization, allocation, utilization of borrowed capital, repayment, management of public debt, financial risk management, ensuring debt safety, and national financial security.

5. Evaluating the effectiveness of borrowed capital utilization and public debt management.

6. Compiling, reporting, and publishing information on public debt.

7. Propagating and disseminating policies and laws on public debt management.

8. Inspecting and auditing the implementation of laws on public debt management.

9. Handling violations, complaints, and denunciations in the implementation of laws on public debt management.

10. Organizing training and professional development in public debt management.

11. International cooperation in public debt management.

Article 5. Principles of Public Debt Management

1. The State manages public debt uniformly and comprehensively from mobilization, allocation, utilization of borrowed capital to repayment.

2. Ensuring debt safety within the limits approved by competent authorities, ensuring national financial security, and macroeconomic balance.

3. Ensuring efficiency in borrowing and utilizing borrowed capital; not using short-term loans for long-term investment. Commercial foreign borrowing funds can only be used for programs and projects capable of directly recovering capital and ensuring repayment capability.

4. Borrowers bear responsibility for fully fulfilling their debt repayment obligations.

5. Transparency in mobilization, allocation, utilization of borrowed capital, repayment, and public debt management. Programs and projects using government and local authority borrowed capital must be audited by the State Audit Office or independent auditors.

6. All government debt obligations are treated equally.

Article 6. Prohibited Actions in Public Debt Management

1. Mobilizing capital beyond authority or purpose.

2. Deciding to lend, re-lend, or provide government guarantees beyond authority, purpose, or target.

3. Using borrowed capital illegally, contrary to purpose, or wastefully.

4. Misappropriating or misusing borrowed capital through abuse of position or power, causing loss.

5. Colluding or being negligent in appraisal work.

6. Obstructing supervisory, inspection, audit activities, and handling violations related to the implementation of laws on public debt management.

7. Failing to provide or providing incomplete, untimely, or inaccurate information on public debt as required by law.

Chapter II

TASKS, POWERS OF THE NATIONAL ASSEMBLY, GOVERNMENT, AND OTHER STATE ORGANIZATIONS AND RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS IN PUBLIC DEBT MANAGEMENT

RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS IN PUBLIC DEBT MANAGEMENT

Article 7. Tasks and Powers of the National Assembly

1. Deciding on safe debt indicators in the five-year socio-economic development plan, including:

a) Public debt to GDP;

b) National foreign debt to GDP;

c) Government repayment to total state budget revenue;

d) National foreign debt obligation to total export value.

2. Deciding on objectives and orientations for mobilizing, utilizing borrowed capital, and managing public debt in each five-year phase to ensure safe debt indicators.

3. Deciding on the total amount, structure of borrowing and repayment annually by the Government linked to the state budget estimate.

4. Approving investment policies for important national projects funded by government borrowed capital.

5. Supervising the mobilization, allocation, utilization of borrowed capital, repayment, and management of public debt.

Article 8. Tasks and Authorities of the Government

1. To unify state management over public debt, assign responsibilities to each agency, and coordinate responsibilities among sectoral and local agencies in managing public debt.

2. To submit to the National Assembly for decision on public debt safety targets; objectives, directions for mobilizing, utilizing borrowed capital, and managing public debt during each five-year period; the total amount, borrowing structure, and annual repayment of the Government linked to the state budget estimate.

3. To decide specific policies and solutions to implement the public debt safety targets stipulated in Clause 1, Article 7 of this Law.

4. To approve the issuance plan for international bonds of the Government; to decide on negotiations and signing of international treaties on foreign borrowing by the Government.

5. To organize inspections and audits regarding the mobilization, allocation, utilization of borrowed capital, repayment, and management of public debt; to report to the National Assembly and the Standing Committee of the National Assembly on the utilization of borrowed capital, management of public debt, and implementation of important national projects and programs using borrowed capital from the Government.

Article 9. Tasks and Authorities of the Prime Minister

1. To approve detailed annual borrowing and repayment plans based on the total amount and borrowing structure decided by the National Assembly according to Clause 3, Article 7 of this Law, including the following main contents:

a) The Government's borrowing plan according to domestic and foreign sources and usage objectives, excluding short-term loans to cover temporary budget deficits;

b) The Government's repayment plan, excluding repayments for short-term loans to cover temporary budget deficits;

c) Annual limits on foreign commercial borrowing and government guarantees for foreign borrowing.

2. To approve the medium-term public debt management program for the next three years to concretize the objectives, directions for mobilizing and utilizing borrowed capital, and managing public debt decided by the National Assembly according to Clause 2, Article 7 of this Law, including the following main contents:

a) Balancing domestic and foreign borrowing needs;

b) Forecasting the annual ratio of public debt to GDP;

c) Forecasting the annual ratio of foreign debt to GDP;

d) Forecasting annual limits on foreign commercial borrowing and government guarantees for foreign borrowing;

đ) Solutions and methods for mobilizing borrowed capital;

e) Sources and methods for repayment;

g) Solutions for handling debts, restructuring debt portfolios, and debt lists;

h) Policies and regulatory documents needed to be issued to enhance the effectiveness of public debt management.

3. To approve the list of requirements for ODA funding.

4. To decide on the content of international treaties on foreign borrowing by the Government.

5. To approve the issuance plan for government bonds to raise funds for domestic investment projects, plans for mobilizing and utilizing foreign commercial borrowing.

6. To approve the plan for handling debts, restructuring debt portfolios, and debt lists.

7. To decide on allocating or re-lending for programs and projects using foreign borrowing from the Government.

8. To decide on issuing government guarantees.

9. To direct inspection and audit work on the implementation of laws on public debt management.

Article 10. Tasks and Authorities of the Ministry of Finance

1. Assist the Government in uniformly managing state affairs concerning public debt.

2. Take the lead in establishing objectives and directions for raising, using borrowed capital, and managing public debt during each five-year period; medium-term management programs; a system of indicators to monitor government debt, public debt, national foreign debt, and annual detailed borrowing and repayment plans of the Government for submission to the competent authority for approval.

3. Organize the implementation of public debt limits, commercial foreign borrowing limits, and government guarantees.

4. Organize negotiations and signing of foreign loan agreements according to the division of labor assigned by the Government.

5. Serve as the official representative borrower for foreign loans on behalf of the State and the Government, except for loans negotiated and signed by the State Bank of Vietnam which has been authorized; carry out transactions related to the Government's debt.

6. Organize negotiations and signing of government guarantee agreements; serve as the official representative guarantor for government guarantees.

7. Take the lead in drafting proposals for issuing international bonds by the Government for submission to the Government for approval.

8. Take the lead in drafting proposals for issuing government bonds to raise funds for domestic investment projects, proposals for raising and plans for using commercial foreign borrowing funds for submission to the Prime Minister for approval.

9. Organize the issuance of domestic government bonds and international bonds according to approved plans or proposals.

10. Implement borrowing from legitimate domestic financial sources to cover temporary budget deficits at the central level.

11. Manage the Government’s borrowings, including:

a) Establishing and promulgating financial management regulations for borrowings;

b) Implementing disbursements from the Government’s borrowing funds for approved investment programs and projects and other objectives; guiding and organizing the relending of the Government’s foreign borrowing funds.

12. Review applications for government guarantees, proposals for issuing domestic bonds, and internationally issued bonds guaranteed by the Government submitted by enterprises and financial and credit organizations for submission to the Prime Minister for decision; implement and manage government guarantees.

13. Fulfill the Government’s debt obligations and the guarantor’s obligations for government guarantees.

14. Manage the public debt portfolio, organize sustainable debt analysis, and risk management; propose, submit to the Prime Minister for approval, and organize the implementation of proposals to handle debts, restructure debt portfolios, and debt lists.

15. Manage the Debt Repayment Reserve Fund.

16. Develop and manage a database on public debt; compile, report, and publish information on public debt.

17. Lead and coordinate with refinancing agencies and other relevant agencies to determine specific refinancing conditions for programs and projects utilizing foreign borrowing funds in accordance with legal provisions.

18. Delegate to financial and credit institutions to carry out refinancing or sign refinancing agreements with secondary borrowers when the Ministry of Finance directly provides refinancing.

19. Monitor, inspect, audit, and evaluate the use of Government borrowing funds or those guaranteed by the Government; local government borrowing and repayment; manage and recover refinanced funds according to delegated refinancing and refinancing agreement regulations.

20. Coordinate with the State Bank of Vietnam in domestic fund-raising activities to ensure effective monetary policy and credit management.

21. Participate with the Ministry of Planning and Investment in drafting and submitting to the Prime Minister for approval the list of ODA funding requirements before the signing of international agreements on ODA borrowing or project lists.

22. Regularly or upon request, report to the competent authority on the situation of borrowing fund usage and public debt management.

Article 11. Tasks and Authorities of the Ministry of Planning and Investment

1. In accordance with the division of labor assigned by the Government, take the lead in compiling the list of requirements for ODA funding.

2. In accordance with the division of labor and delegation from the Prime Minister, organize fundraising, coordinate ODA resources, take the lead in negotiating and signing international agreements on ODA loans.

3. Monitor and evaluate programs and projects using ODA funds provided by the Government.

4. Participate with the Ministry of Finance in:

a) Building targets and directions for mobilizing, utilizing loan capital and managing public debt during each five-year period; medium-term debt management programs and detailed annual borrowing and repayment plans of the Government;

b) Establishing a system of indicators to monitor government debt, public debt, and foreign debt of the country;

c) Preparing proposals for issuing international bonds by the Government;

d) Preparing proposals for issuing central construction bonds domestically, proposals for mobilizing and plans for using commercial foreign loans;

e) Balancing ODA resources in the annual state budget estimate for programs and projects.

Article 12. Tasks and Authorities of the State Bank of Vietnam

1. In accordance with the division of labor and delegation from the President or the Government, take the lead in coordinating with the Ministry of Finance and other relevant agencies to prepare content, conduct negotiations, and sign international agreements with international financial and monetary organizations where the State Bank of Vietnam is the representative and the official borrower under these international agreements.

2. Review proposals for rescheduling commercial foreign loans of the Government according to credit programs, credit limits, and commercial loans guaranteed by the Government issued by financial and credit institutions.

3. Guide and organize registration of foreign loans by enterprises and financial and credit institutions guaranteed by the Government.

4. Participate with the Ministry of Finance in:

a) Building targets and directions for mobilizing, utilizing loan capital and managing public debt during each five-year period; medium-term debt management programs and detailed annual borrowing and repayment plans of the Government;

b) Establish a system of indicators to monitor government debt, public debt, and foreign debt of the country;

c) Prepare proposals for domestic and foreign capital mobilization by the Government linked to monetary policy and credit management.

Article 13. Tasks and Authorities of Ministries and Agencies Equivalent to Ministries

1. Within their respective tasks and authorities, Ministries and Agencies Equivalent to Ministries shall implement state management over public debt in accordance with the division of labor assigned by the Government.

2. Approve loan and bond issuance proposals guaranteed by the Government, and proposals for rescheduling Government loans before submitting them to the Ministry of Finance for review.

3. Supervise, inspect, and audit the use of loans and bond issuance by subordinate units and report and provide information on public debt.

Article 14. Tasks and Authorities of Provincial People's Councils

1. Approve detailed annual borrowing and repayment plans of provincial People's Committees, including:

a) Borrowing plans of provincial People's Committees from domestic sources, rescheduled foreign loans of the Government, and purposes of use;

b) Repayment plans from provincial budgets, revenues recovered from local investment projects.

2. Decide on project lists at the provincial level funded from rescheduled foreign loans of the Government and domestic loans as stipulated by the State Budget Law.

3. Decide on borrowing for investment as stipulated by the State Budget Law, loan and bond issuance proposals, and repayment plans submitted by provincial People's Committees.

4. Supervise borrowing, rescheduling, bond issuance, use of borrowed funds, and repayment by provincial People's Committees.

Article 15. Tasks and Authorities of the People's Committee at the provincial level

1. Prepare detailed annual plans for borrowing and repaying debts of the People's Committee at the provincial level to submit to the People's Council at the same level for approval.

2. Develop a list of projects under the provincial level to be invested from rescheduled foreign loans of the Government and domestic loan sources in accordance with the State Budget Law to submit to the People's Council at the same level for decision.

3. Develop plans for borrowing funds for investment in accordance with the State Budget Law, loan proposals, bond issuance and debt repayment plans to submit to the People's Council at the same level for decision and send to the Ministry of Finance and the Ministry of Planning and Investment for monitoring and consolidation. In cases where borrowing is through bond issuance, the bond issuance proposal must be approved in writing by the Ministry of Finance before implementation.

4. Organize the issuance of local government bonds, borrow from other legitimate financial sources, and reschedule foreign loans of the Government according to Article 40 of this Law.

5. Supervise and urge the effective use of rescheduled funds from Government loans, local government bond issuance funds, and recovery of funds; report and provide information on public debt.

6. Allocate recovered revenues from local investment projects in the provincial budget balance to ensure full repayment of debt when due.

Article 16. Tasks and Authorities of Agencies and Organizations Receiving and Using Loans or Being Guaranteed Loans

Agencies and organizations receiving and using loans or being guaranteed loans must ensure the efficient and purposeful use of borrowed funds and fulfill all related obligations arising from loan agreements or guarantees.

Article 17. Responsibilities of Organizations and Individuals Deciding to Provide Loans, Reschedule Loans, Issue Guarantees, Appraise and Other Related Organizations and Individuals

1. Organizations and individuals deciding to provide loans, reschedule loans, issue guarantees, appraise and other related organizations and individuals within their scope of tasks and authorities shall be responsible under the law for performing the assigned tasks and authorities in accordance with the legal provisions on public debt management.

2. In cases where organizations and individuals abuse their positions and granted authorities to violate prohibitions in state management of public debt, they will be subject to legal sanctions depending on the nature and degree of violation.

Chapter III

MANAGEMENT OF GOVERNMENT DEBT

Article 18. Purpose of Government Borrowing

1. Investment in economic and social development within the central government's expenditure responsibilities as stipulated by the State Budget Law.

2. To cover temporary shortfalls in the state budget through short-term borrowing.

3. To restructure government debt and guaranteed debt.

4. To lend to enterprises, financial and credit institutions, and local governments in accordance with the law.

5. Other purposes aimed at ensuring national financial security.

Article 19. Forms of Government Borrowing

1. The Government borrows through the issuance of debt instruments and signing loan agreements within the total amount, structure of borrowing and repayment annually decided by the National Assembly.

2. The Government borrows in domestic currency, foreign currency, gold, or goods convertible into domestic currency or foreign currency.

Article 20. Domestic Borrowing

1. The Government borrows domestically through the issuance of debt instruments and signing loan agreements.

2. The Ministry of Finance is the agency issuing debt instruments of the Government as provided for in Clause 1 of this Article.

3. The Ministry of Finance signs domestic loan agreements according to the Government's detailed annual borrowing and repayment plan from legitimate financial sources in accordance with the State Budget Law.

4. The Government specifies the details of the issuance of debt instruments of the Government and the management of domestic government debt.

Article 21. Foreign Borrowing

1. The Government borrows from abroad through the issuance of international government bonds and loan agreements.

2. The Ministry of Finance is the agency responsible for issuing international government bonds. The issuance of international government bonds can only be carried out when the following conditions are met:

a) Programs and projects using funds from the issuance of international bonds are determined to be national priorities; programs and investment projects are effective, have completed investment procedures in accordance with laws on investment and related laws;

b) Meeting the conditions stipulated in the Government's resolution on the issuance of international bonds;

c) Legal documents for the issuance of international bonds have been completed in accordance with Vietnamese law and international practices;

d) International market conditions are favorable, ensuring success at reasonable costs.

3. Borrowing through loan agreements shall be conducted as follows:

a) For ODA loans, the Ministry of Planning and Investment leads the mobilization, builds the list of ODA funding requirements, organizes negotiations, signs international treaties on ODA loans, allocates ODA funds for programs and projects, and manages the sources of funds. Specific loan agreement negotiations and signings are organized by the Ministry of Finance. In cases where the State Bank of Vietnam is assigned by the Government to negotiate and sign loan agreements, the State Bank of Vietnam transfers the signed loan agreements to the Ministry of Finance for implementation;

b) For non-ODA loans, the Ministry of Finance leads negotiations and signing of loan agreements according to the Government's decision. In cases where the State Bank of Vietnam is assigned by the Government to negotiate and sign loan agreements, the State Bank of Vietnam transfers the signed loan agreements to the Ministry of Finance for implementation;

c) Specific loan agreements are signed when investment programs and projects are permitted by the National Assembly, the Government, or the Prime Minister to use foreign borrowing funds for implementation and have completed investment procedures in accordance with laws on investment and related laws, or when proposals for using borrowed funds for other purposes have been approved by competent authorities and the contents of the loan agreements have been approved.

4. Signing and approving framework agreements on ODA loans and specific loan agreements on behalf of the State shall be carried out in accordance with the Law on Signing, Joining, and Implementing International Treaties; for other specific loan agreements, the following provisions apply:

a) Based on annual detailed borrowing and repayment plans and approved framework agreements on ODA loans, the leading negotiation agency organizes negotiations on the content of loan agreements with foreign lenders;

b) The leading negotiation agency simultaneously seeks opinions from relevant agencies, including the review opinion of the Ministry of Foreign Affairs and the audit opinion of the Ministry of Justice, submitted to the Prime Minister for the decision to sign loan agreements.

The Government shall specify the procedures and formalities for signing and approving specific loan agreements.

5. The Government shall provide detailed regulations on the management of foreign borrowing by the Government; management and use of ODA funds.

Article 22. Use of Government Loans

1. Government loans shall be used as follows:

a) To allocate from domestic loan sources and preferential foreign loans for investment programs and projects on infrastructure, social welfare, and other programs and projects that cannot directly recover funds and are within the State budget expenditure tasks as stipulated by the State Budget Law;

b) To re-lend all or part of foreign loan sources to investment programs and projects capable of recovering part or all of the loan, including infrastructure construction projects consistent with the national socio-economic development orientation approved by competent authorities. The Government shall specify in detail the procedures for re-lending foreign government loans;

c) To restructure debts and debt portfolios according to the annual detailed borrowing and repayment plans of the Government and approved debt restructuring proposals.

2. Conditions for re-lending specific programs and projects include the value of re-lending, currency of debt, interest rate, repayment period, and implementation fees as prescribed by the Government.

3. Based on the purpose of each loan, the Ministry of Finance shall submit to the Prime Minister for approval the allocation or re-lending for each program and project.

Article 23. Re-lending Agencies and Borrowers

1. The Ministry of Finance shall directly or authorize financial and credit organizations to implement re-lending.

2. Borrowers eligible for re-lending include:

a) Financial and credit organizations borrowing to lend further to users under credit programs or credit components in programs and projects using foreign loans;

b) Enterprises borrowing to invest in programs and projects capable of recovering part or all of the loan;

c) Provincial People's Committees borrowing to invest in economic and social development within local budget expenditure tasks.

Article 24. Conditions for Re-lending

1. Conditions for financial and credit organizations to be eligible for re-lending include:

a) Having programs and projects permitted by competent authorities to use loans and approved by foreign lenders;

b) Ensuring the ability to repay debt according to the financial plan assessed in accordance with the law;

c) In cases of re-lending commercial foreign loans of the Government, they must meet the capital safety ratio as prescribed by the Government, except for state policy banks.

2. Conditions for enterprises to be eligible for re-lending include:

a) Having programs and projects consistent with the national socio-economic development orientation, permitted by competent authorities to use loans, completed investment procedures in accordance with the Investment Law and related laws, and approved by foreign lenders;

b) Possessing the capability to implement projects and ensuring the ability to repay debt according to the financial plan assessed in accordance with the law;

c) In cases of re-lending commercial foreign loans of the Government, they must ensure at least 20% of the total investment capital is equity. For important national projects, key projects with urgency and special importance for national socio-economic development where enterprises have not met the equity capital conditions, the Prime Minister may consider and decide to exempt this condition in specific cases;

d) Having sound financial status, not having losses in the three most recent consecutive years, except for losses due to policy implementation; at the time of requesting re-lending, there should be no overdue debts with financial and credit organizations; no overdue debts related to re-lending foreign government loans and the State budget. If an enterprise has not been operating continuously for three years, it must provide a commitment from the owner or parent company regarding the ability to repay the re-lending debt;

e) Implementing loan guarantees for re-lending in accordance with the law.

3. Conditions for provincial People's Committees to be eligible for re-lending include:

a) Being permitted by competent authorities to re-borrow from foreign government loan sources;

b) Having investment projects for economic and social development within local budget expenditure tasks, completed investment procedures in accordance with the Investment Law and related laws;

c) Local budgets ensuring the ability to repay debts.

Article 25. Review of loan programs and projects

1. For ODA loans for on-lending under investment programs and projects:

a) In cases where the on-lender bears credit risk, the on-lender shall review the financial plan of the on-lending program/project, the financial capacity of the borrower, and report the results of such review to the Ministry of Finance before signing the on-lending agreement;

b) In cases where the on-lender does not bear credit risk, the Ministry of Finance shall conduct on-lending through the on-lender based on the list of projects to be on-lent from foreign loans of the Government that have been approved by competent authorities and the results of the financial plan review conducted by the project approval authority.

2. For ODA loans under programs and credit limits:

a) The Ministry of Finance shall review the plan for using borrowed funds and repaying debts of financial and credit organizations participating in the program before signing the on-lending agreement;

b) Financial and credit organizations lending to the final users of capital shall be responsible for reviewing the projects and selecting borrowers suitable for the agreed credit program with the sponsor or lender, and shall bear all risks arising from on-lending.

3. For commercial loans of the Government to enterprises for on-lending, the on-lender shall be responsible for re-reviewing the financial plans of the on-lending projects, the financial capacity of the borrower, and reporting the results of such review to the Ministry of Finance before signing the on-lending agreement.

4. For commercial loans under programs and credit limits:

a) The State Bank of Vietnam shall review the plan for using borrowed funds and repaying debts of credit organizations participating in the program and notify the results of such review to the Ministry of Finance before the Ministry of Finance signs the on-lending agreement;

b) Credit organizations lending to the final users of capital shall be responsible for reviewing the projects and selecting borrowers suitable for the agreed credit program with the sponsor or lender, and shall bear all risks arising from on-lending.

5. For Government loans to provincial People's Committees for on-lending, the Ministry of Finance shall review the ability of the provincial budget to repay debt according to the provisions of the Law on Budget Decentralization before signing the on-lending agreement.

6. The reviewing agencies and organizations shall be responsible for the results of their reviews in accordance with the provisions of the law.

Article 26. Responsibilities of the on-lending agency

1. Monitor and inspect the use of on-lent funds by the borrower. Record and account for each on-lending transaction for individual borrowers.

2. Complete legal documentation, manage, and handle collateral and other assets provided by the borrower to secure the loan.

3. Apply necessary measures and sanctions prescribed by law to recover on-lent funds, including principal, interest, fees, and other related costs from the borrower fully and on time as stipulated in the on-lending agreement, the authorization contract for on-lending, and transfer repayment to the Debt Repayment Reserve Fund.

4. Provide information and reports related to the implementation of loaned programs and projects to the Ministry of Finance and relevant authorities periodically or upon request, and be responsible for the accuracy and honesty of the information and reports.

5. After applying necessary measures and sanctions, if the borrower cannot repay part or all of the debt, the on-lending agency shall be responsible for:

a) Repaying the debt on behalf of the borrower if the on-lending agency has been authorized by the Ministry of Finance to lend under a credit risk-bearing method;

b) Reporting to the Ministry of Finance and the program/project reviewer for appropriate action if the on-lending agency has been authorized by the Ministry of Finance to lend under a non-credit risk-bearing method.

Article 27. Responsibilities of the Borrower

1. Manage and use the loaned funds according to the approved purpose in the investment report or feasibility study report of the project which has been approved by the competent authority.

2. Fully repay the debt on time in accordance with the conditions stipulated in the rescheduling agreement. In case of failure to fully fulfill the repayment obligation, the borrower must comply with the measures and sanctions applied by the rescheduling agency to recover the debt and bear responsibility under the law if the debt cannot be repaid.

3. Comply strictly with all legal provisions on collateral and other security measures for loans.

4. Provide relevant information and reports on the implementation of programs and projects funded by the loan to the Ministry of Finance, the rescheduling agency, and the competent authority periodically or upon request, and bear responsibility for the accuracy and honesty of such information and reports.

Article 28. Borrowing for Debt Restructuring

1. Borrowing for debt restructuring must meet the following conditions:

a) The new loan amount does not exceed the value of the restructured debt;

b) Minimize debt obligations or risks compared to before the debt portfolio was restructured;

c) Not borrow foreign currency to restructure domestic currency loans.

2. The Ministry of Finance shall carry out debt restructuring operations according to the annual detailed borrowing and repayment plan of the Government or the approved restructuring proposal.

Article 29. Debt Repayment Reserve Fund

1. The Debt Repayment Reserve Fund is a state budget fund established by the Government and managed by the Ministry of Finance to ensure the ability to pay off the Government's debt obligations arising from loans made for rescheduling or contingent liabilities of the state budget resulting from government guarantees.

2. Sources of income for the Debt Repayment Reserve Fund include:

a) Recovery of debts from loans made for rescheduling by the Government;

b) Government guarantee fees;

c) Recovery of temporary advances of capital from the Debt Repayment Reserve Fund as prescribed by the Government;

d) Interest on temporary advances of capital and interest from debt restructuring and government debt portfolios;

đ) Interest on deposits or entrusted management of the Debt Repayment Reserve Fund's capital;

e) Other lawful revenues.

3. Expenditures of the Debt Repayment Reserve Fund include:

a) Reimbursement to the state budget for debt payments for foreign loans borrowed by the Government for rescheduling;

b) Advance payment on behalf of the guaranteed party in cases where the guaranteed party is unable to repay the debt;

c) Advance capital for implementing government debt and debt guaranteed by the Government restructuring to reduce borrowing costs;

d) Other advances aimed at improving the operational efficiency of the Debt Repayment Reserve Fund as prescribed by the Government;

đ) Management expenses of the Debt Repayment Reserve Fund as prescribed by the Government.

4. Idle temporary capital of the Debt Repayment Reserve Fund must be preserved and developed through deposit services and asset management by reputable financial and credit organizations within the country.

5. The Government shall provide detailed regulations on managing the Debt Repayment Reserve Fund.

Article 30. Government Debt Repayment

1. The Government allocates the state budget to fully fulfill the direct debt repayment obligations of the Government.

2. The expenditure for principal, interest, fees, and other related costs arising from borrowing shall be carried out from the state budget by the Ministry of Finance according to the annual detailed borrowing and repayment plan of the Government that has been approved.

3. For loans rescheduled from foreign loans of the Government, the rescheduling agency shall repay into the Debt Repayment Reserve Fund in accordance with the guidelines of the Ministry of Finance.

Chapter IV

GOVERNMENT GUARANTEE MANAGEMENT

Article 31. Government Guarantee Issuing and Managing Authority

1. The Ministry of Finance shall be the authority issuing and managing government guarantees for domestic loans or bond issuances, and international bonds.

2. The Ministry of Finance shall take the lead in drafting and submitting to the Government for promulgation regulations on issuing and managing government guarantees.

Article 32. Entities Eligible for Government Guarantees

1. Enterprises implementing programs or projects as stipulated in Article 33 of this Law.

2. State policy banks and financial organizations implementing state-targeted credit programs.

Article 33. Programs and Projects Considered for Government Guarantees

1. Investment programs or projects decided on investment orientation by the National Assembly or the Prime Minister.

2. Programs or projects applying high technology, energy projects, mineral exploitation and processing projects, or production of export goods and services in line with national socio-economic development orientations.

3. Programs or projects in sectors or areas encouraged for investment by laws on investment and related laws.

4. Programs or projects funded by commercial loans tied to Official Development Assistance (ODA) in the form of blended finance.

Article 34. Conditions for Obtaining Government Guarantees

1. Conditions for obtaining government guarantees for programs or projects include:

a) Completion of investment procedures in accordance with laws on investment and related laws;

b) Having a loan proposal, bond issuance plan, and loan usage and repayment plan that have been reviewed by the Ministry of Finance and approved by the Prime Minister.

2. Conditions for obtaining government guarantees for borrowers or bond issuers include:

a) In cases where enterprises implement investment projects, they must ensure at least 20% of the total investment capital is equity. For financial and credit institutions, they must meet the capital adequacy ratio prescribed by the Government, except for state policy banks;

b) Sound financial status, not having incurred losses for three consecutive recent years, except for losses due to policy implementation; at the time of requesting a guarantee, there should be no overdue debts with financial and credit institutions; no overdue debts related to guaranteed amounts, re-lent foreign loans of the Government and state budget. If enterprises or financial and credit institutions have not operated continuously for three years, they must have a commitment from shareholders or parent companies to ensure debt repayment capacity for guaranteed loans;

c) Acceptance of sanctions as prescribed by the guarantee issuing authority;

d) In cases of issuing international bonds, they must have an internationally recognized credit rating but not lower than one level compared to the national credit rating;

đ) No violation of public debt management laws in the last three consecutive years up to the time of requesting a guarantee;

e) In cases of key projects or large projects with urgency and special importance for national socio-economic development, if enterprises fail to meet the equity capital conditions, the Prime Minister may consider and decide to exempt from this condition on a case-by-case basis.

3. Conditions for obtaining government guarantees for foreign loans or international bond issuances include:

a) Foreign loans through loan agreements must have a value of at least 50 million US dollars, international bond issuance values of at least 100 million US dollars, and within the annual limit of commercial loans and foreign loan guarantees set by the Government, excluding loans specified in Clause 4 of Article 33 of this Law; the minimum repayment period is ten years, and loan and issuance conditions must be consistent with market conditions and international practices;

b) Foreign currency-denominated domestic loans must have a value of at least 30 million US dollars, with a minimum repayment period of five years; if denominated in local currency, the value must be at least 500 billion Vietnamese Dong, with a minimum repayment period of one year.

Article 35. Management of Government Guarantees

1. Loans and issuance of international bonds guaranteed by the Government must be registered with the State Bank of Vietnam.

2. The management, monitoring, and inspection of the use of loan funds and bond issuance guaranteed by the Government shall be conducted as for other loans of the Government.

3. The debt obligation arising from loans and bond issuance guaranteed by the Government is a contingent liability of the Government.

Article 36. Responsibilities of Guarantee Issuing Authorities and Guaranteed Parties

1. The Ministry of Finance is the guarantee issuing authority responsible for:

a) Reviewing financial plans and guarantee issuance conditions based on applications for guarantee issuance for specific programs and projects submitted to the Prime Minister for decision and bearing responsibility for the review results;

b) Participating in negotiations regarding loan terms and agreements, and leading negotiations on the content of the guarantee letter;

c) Inspecting the business operations and foreign loan fund usage of the guaranteed party to assess its repayment capacity; proposing measures and sanctions for handling situations where the guaranteed party encounters difficulties in repayment, submitting these proposals to the Prime Minister for decision;

d) Fulfilling the guarantor's payment obligations arising from the guarantee agreement from the accumulated repayment fund when the guaranteed party cannot repay the debt;

đ) Collecting government guarantee fees in accordance with the provisions of the law;

e) Applying necessary measures and sanctions as prescribed by law to recover debts and costs incurred from repaying on behalf of the guaranteed party;

g) Summarizing and reporting to competent authorities on issued guarantees.

2. Responsibilities of the Guaranteed Party:

a) Providing relevant documents to the guarantee issuing authority for review;

b) Fully performing the obligations of the guaranteed party towards the guarantee issuing authority. In case of inability to fully repay the debt on time, it must comply with the measures and sanctions applied by the guarantee issuing authority; bear responsibility according to the law if unable to repay the debt;

c) Providing information requested by the guarantee issuing authority about the implementation of programs and projects and the ability to fulfill payment obligations under the loan agreement;

d) Reporting promptly on risks of breaching guarantee commitments;

đ) Paying guarantee fees fully and on time as prescribed by law.

Chapter V

MANAGEMENT OF DEBT OF LOCAL AUTHORITIES

Article 37. Purpose of Local Authority Borrowing

1. Investment in economic and social development within the expenditure responsibilities of local budgets as stipulated by the State Budget Law.

2. Investment in projects with the potential for local repayment.

Article 38. Forms of Local Authority Borrowing

1. For domestic borrowing, Provincial People's Committees may only borrow for investment as provided in Article 37 of this Law through the issuance or delegation of issuance of local government bonds, and borrowing from other lawful sources of finance as prescribed by law.

2. For foreign borrowing, Provincial People's Committees may not directly borrow from abroad but can only borrow from the Government's foreign loan funds to invest in economic and social development within the expenditure responsibilities of local budgets as provided in point c, Clause 2, Article 23 of this Law.

Article 39. Conditions for Domestic Borrowing by Provincial People's Committees

1. For borrowing to invest in economic and social development within the budgetary expenditure responsibilities of local budgets as prescribed by the State Budget Law, the following conditions must be met:

a) The project has completed investment procedures in accordance with laws on investment and related laws, and is included in the five-year investment plan decided upon by the same-level People's Council;

b) The bond issuance proposal, borrowing capital usage plan, and repayment plan have been approved by the same-level People's Council and in writing by the Ministry of Finance;

c) The value of the loan and domestic bond issuance must be within the borrowing limit of the local budget as stipulated by the State Budget Law;

d) In cases of re-borrowing foreign loans of the Government, the conditions set forth in Clause 3, Article 24 and Clause 5, Article 25 of this Law must be met.

2. For borrowing to invest in projects with the potential for local repayment, the following conditions must be met:

a) The project has completed investment procedures in accordance with laws on investment and related laws, and has been determined by the competent authority to have the potential for capital recovery;

b) The bond issuance proposal to invest in the project has been reviewed and approved in writing by the Ministry of Finance.

3. The Government shall provide detailed regulations on the issuance of local government bonds.

Article 40. Borrowing Organization

1. The provincial People's Committee organizes the issuance of local government bonds to borrow domestically through the State Treasury or delegates financial and credit organizations within its jurisdiction to issue according to the Government's regulations and enters into agreements to borrow from other legitimate sources as prescribed by law.

2. For re-borrowing from the source of foreign loans of the Government, the provincial People's Committee shall implement in accordance with Articles 23, 24, and 25 of this Law.

Article 41. Use of Borrowed Capital

1. Domestic loans by provincial People's Committees for investing in economic and social development within the budgetary expenditure responsibilities of local budgets shall be managed and utilized in accordance with the State Budget Law.

2. Loans for investing in projects with the potential for repayment, and re-borrowings from the source of foreign loans of the Government shall be managed and utilized in accordance with the law.

Article 42. Debt Repayment

1. The provincial People's Committee shall fully and timely settle principal, interest, fees, and other related costs arising from borrowing by the provincial People's Committee.

2. The repayment of re-borrowed funds from the source of foreign loans of the Government shall be carried out in accordance with the Government's regulations.

3. Sources for debt repayment shall be guaranteed from the provincial budget and revenues recovered from local investment projects.

Chapter VI

ORGANIZATION OF INFORMATION ON PUBLIC DEBT

Article 43. Construction of Public Debt Database

1. The Ministry of Finance is the lead agency responsible for constructing and managing the unified public debt database.

2. The Government shall provide detailed regulations on the organization of public debt information, mechanisms for providing, reporting, and disclosing public debt information.

Article 44. Reporting Public Debt Information

1. Annually or at the request of the National Assembly, its agencies, and the Ministry of Finance, shall compile and submit to the Government for reporting to the National Assembly and its agencies information on public debt, including:

a) The implementation status of annual borrowing, guarantee, and repayment plans, including signed borrowing amounts, withdrawn capital, issuance value, guarantee value, repayment amounts, outstanding debt, debt-to-GDP ratio;

b) The implementation status of programs and projects using Government borrowing capital and capital guaranteed by the Government;

c) The borrowing and repayment status of provincial People's Committees;

d) Other relevant information.

2. Annually, provincial People's Committees shall report to the same-level People's Council, the Ministry of Finance, and competent authorities information on public debt, including:

a) The borrowing and repayment status of the locality, including signed borrowing amounts, actual received borrowing capital, repayment amounts, outstanding debt;

b) The implementation status of programs and projects using borrowed capital;

c) Other related information.

Article 45. Agency Receiving and Providing Information on Government Debt

1. The Ministry of Finance is the lead agency receiving information on government debt.

2. Agencies and organizations providing information on government debt include:

a) Ministries and agencies at the ministerial level;

b) People's Committees of provinces;

c) Organizations issuing bonds and borrowing with government guarantees;

d) Loan refinancing agencies;

đ) Units using government loans.

Article 46. Coordination in Providing Information on Government Debt

1. The State Bank of Vietnam periodically provides the Ministry of Finance with consolidated information on foreign borrowing and repayment situations, foreign commercial borrowing limits for enterprises and financial credit institutions, as prescribed by the Government.

2. State-owned enterprises and state financial credit institutions periodically provide the Ministry of Finance with information on domestic and foreign borrowing and repayment situations, as prescribed by the Government.

3. In cases where necessary, the Ministry of Finance has the right to request relevant agencies and organizations to provide information on any loan for government debt management.

Article 47. Disclosure of Information on Government Debt

1. The Ministry of Finance implements the disclosure of information on government debt.

2. Information disclosed on government debt includes the total outstanding debt, domestic and foreign debt structure of the Government, guaranteed debt, local government debt, annual figures on received loans and repayments, government debt monitoring indicators, public debt, and foreign debt of the country.

3. Information on government debt is regularly published by the Ministry of Finance in accordance with the law.

Chapter VII

IMPLEMENTING PROVISIONS

Article 48. Effective Date

This Law takes effect from January 1, 2010.

Article 49. Detailed Provisions and Guidance for Implementation

The Government shall provide detailed regulations and guidance for implementing the provisions assigned in this Law; guide other necessary contents of this Law to meet the requirements of state management.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, the twelfth session, fifth meeting, on June 17, 2009./.