Circular No. 56/2011/TT-BTC guides the methods for calculating monitoring indicators and organizing the supervision of government debt and foreign debt of the state in accordance with Decree No. 79/2010/NĐ-CP.

CIRCULAR

Guidelines on methods for calculating supervisory indicators and organizing

public debt and foreign debt monitoring activities

Pursuant to the Law on Public Debt Management dated June 17, 2009;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to the Government Decree No. 79/2010/NĐ-CP dated July 14, 2010 on public debt management operations;

The Ministry of Finance guides the methods for calculating supervisory indicators and organizing public debt and foreign debt monitoring activities of the country as follows:

PART I
GENERAL PROVISIONS

Article 1. Scope of Regulation

This Circular provides detailed guidance on the methods for calculating supervisory indicators for public debt and foreign debt of the country as stipulated in Article 7 and organizing public debt monitoring activities as stipulated in Article 8 of Decree No. 79/2010/NĐ-CP dated July 14, 2010 of the Government on public debt management operations.

Article 2. Interpretation of Terms

In this Circular, terms that have been defined in Article 3 of the Public Debt Management Law and Article 2 of the Government Decree on public debt management operations shall be understood with the same meanings. The following terms are understood as follows:

1. Safety debt indicators are a system of indicators setting maximum limits on debt related to decisions made by the National Assembly during each period to ensure national debt safety.

2. Debt monitoring is the activity of relevant state management agencies through a debt monitoring indicator system to regularly track the status of debt, analyze and assess the level of risk associated with the debt portfolio, thereby promptly proposing appropriate debt management policy adjustments.

3. The debt monitoring indicator system includes aggregate indices reflecting the level of public debt and foreign debt of the country, the ability to repay debt in comparison with macroeconomic indicators.

4. Total outstanding debt is the sum of loan amounts disbursed but not yet repaid or not yet written off at a given point in time arising from borrowing by entities permitted to borrow under Vietnamese law.

5. Debt obligation is the total amount due for payment, including principal, interest, and fees within a specified period.

6. Overdue debt is a debt where a portion or all of the principal or interest has exceeded the due date up to a certain point in time.

7. Short-term debt is debt with a repayment term of less than one year.

8. Gross Domestic Product (GDP) is the value of newly produced goods and services of the entire economy over a specific period, calculated at current prices, based on data published by the General Statistics Office.

9. State foreign exchange reserves are foreign currency assets reflected in the balance sheet of the State Bank of Vietnam, according to data published by the State Bank of Vietnam in accordance with current laws.

10. Export value of goods and services is the value of exported goods and services during the monitoring period, according to data published by the General Statistics Office.

11. State budget revenue includes tax, fee, and charge revenues; revenues from state economic activities; contributions from organizations and individuals; aid; and other revenues as prescribed by law.

12. Exchange rate for converting Vietnamese Dong to foreign currency for calculating foreign currency-denominated debt indicators is the accounting foreign exchange rate published by the Ministry of Finance.

Chapter II
SYSTEM OF DEBT MONITORING INDICATORS

FOR PUBLIC DEBT AND FOREIGN DEBT OF THE COUNTRY

Article 3. Indicators for monitoring public debt and foreign debt of the country

The system of indicators for monitoring public debt and foreign debt of the country is stipulated in Article 7 of Decree No. 79/2010/NĐ-CP of the Government dated July 14, 2010 on public debt management operations.

Article 4. Methods for determining public debt monitoring indicators

1. Public debt to GDP:

a) This index reflects the scale of public debt relative to the total income of the entire economy and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

2. Government debt to GDP:

a) This index reflects the scale of government debt relative to the total income of the entire economy and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

3. Government foreign trade debt to GDP:

a) This index reflects the scale of government foreign trade debt relative to the total income of the entire economy and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

4. Government-guaranteed debt to GDP:

a) This index reflects the scale of government-guaranteed debt relative to the total income of the entire economy and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

5. Government debt obligations to state budget revenue:

5.1 Government debt repayment obligations (principal, interest, fees) for loans intended to balance the budget:

a) This index determines the scale of government debt for loans intended to balance the budget due annually relative to the government's ability to repay from state budget revenue and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

a) This index determines the scale of indirect government debt due annually relative to state budget revenue.

Government debt repayment obligation ratio for refinancing loans to state budget revenue

b) The index is calculated as follows:

Government contingent debt obligation ratio to state budget revenue

Cumulative government contingent debt obligation up to December 31.

b) The index is calculated as follows:

at the end of December 31

Article 5. Methods for determining foreign debt monitoring indicators

b) The index is calculated as follows:

Total national foreign debt

at the end of December 31

2. Annual national foreign debt repayment obligations (principal, interest, fees) to merchandise and service exports:

b) The index is calculated as follows:

Merchandise and service exports cumulative up to December 31

3. State foreign exchange reserves to short-term foreign debt:

b) The index is calculated as follows:

3. State foreign exchange reserves in relation to short-term foreign debt:

a) This index reflects the ability to use state foreign exchange reserves to repay short-term foreign debts and is calculated at the end of each year on December 31.

b) The index is calculated as follows:

Article 6. Indicators for monitoring overdue debt

1. The ratio of overdue debt to government refinancing loans:

a) This index reflects the scale of overdue debts in the total outstanding balance of government refinancing loans as of December 31 each year.

b) The index is calculated as follows:

2. The ratio of overdue debt to government-guaranteed loans:

a) This index reflects the scale of overdue debts in the total outstanding balance of government-guaranteed loans as of December 31 each year.

b) The index is calculated as follows:

3. The ratio of overdue debt to self-financed foreign debts:

a) This index reflects the scale of overdue debts in the total outstanding balance of self-financed foreign loans (including short-, medium-, and long-term loans) as of December 31 each year.

b) The index is calculated as follows:

Article 7. Indicators regarding maturity structure and interest rates

1. Medium and long-term debt structure - short-term debt for public debt and national foreign debt.

2. Debt borrowing structure within the country (treasury bills, bonds) and from abroad (ODA, concessional, commercial) of the Government.

3. Average interest rate of loans calculated based on the weighted average of loans with different borrowing conditions.

4. Average term of loans calculated based on the weighted average of loans with different terms.

Article 8. System of indicators for evaluating the effectiveness of debt management work

1. The system of indicators for evaluating the effectiveness of debt management work serves the function of assessing strengths and weaknesses in the organization of debt management activities of a country, including:

a) Management and development of debt strategy, evaluation indicators for legal environment, organizational structure, implementation of debt strategy, assessment of debt management activities, and auditing.

b) Coordination of macroeconomic policies, mainly fiscal policy and monetary policy.

c) Implementation of debt management operations, including raising, using borrowed funds, and repayment; guaranteeing, refinancing, and risk management operations.

d) Forecasting cash flow and managing the balance of payments.

e) Managing various risks in the operations of the debt management agency, including supervision and data security, task delegation, and staff capacity.

f) Recording and reporting public debt and national foreign debt data.

2. Through the system of indicators for evaluating the effectiveness of debt management work, the management agency can monitor the progress of the effectiveness of public debt management over different periods.

Chapter III
LIMITS ON PUBLIC DEBT, COMMERCIAL FOREIGN LOANS

AND GUARANTEED FOREIGN LOANS OF THE GOVERNMENT

Article 9. Ceiling on Government Debt

1. The ceiling on government debt is the maximum ratio between the outstanding government debt at each point in time and the Gross Domestic Product (GDP), as determined by the competent authority.

2. The structure of the ceiling on government debt includes:

a) Government debt, including both domestic and foreign debt;

b) Debt of enterprises and organizations guaranteed by the Government, including both domestic and foreign debt.

c) Local government debt arising from the issuance and authorization to issue local government bonds, and borrowing from other lawful sources as prescribed by law.

Article 10. Annual Ceiling on Foreign Commercial Borrowing and Government Guarantees for Foreign Commercial Borrowing

1. The annual ceiling on foreign commercial borrowing and government guarantees for foreign commercial borrowing is the maximum net amount borrowed annually (actual amount borrowed minus principal repayment).

2. Based on capital raising needs and capacity, and the ceiling on government debt, the Ministry of Finance determines the annual ceiling on foreign commercial borrowing and government guarantees for foreign commercial borrowing to be submitted to the Prime Minister for approval.

Article 11. Organization of Ceiling Management

1. Based on the National Assembly's approval of the ceiling on government debt and foreign debt of the country during each period, and the Prime Minister's Decision approving the annual ceiling on foreign commercial borrowing and government guarantees for foreign borrowing, the Ministry of Finance, in collaboration with the State Bank of Vietnam, organizes the implementation, confirms the ceiling, manages, and supervises debt ceilings to ensure safety targets for debt as approved by the competent authority.

2. Enterprises submit their registration of foreign borrowing needs for the following year before December 31 to the Ministry of Finance (for proposed borrowings with government guarantees) and to the State Bank of Vietnam (for borrowings without government guarantees).

3. During the period prior to the Prime Minister's approval of the annual ceiling on foreign commercial borrowing, the Ministry of Finance and the State Bank base their determination of foreign commercial borrowing within the annual ceiling on actual foreign commercial borrowing conditions, ensuring that the cumulative net foreign commercial borrowing up to the confirmation date does not exceed 50% of the previous year's ceiling on foreign commercial borrowing.

4. In cases where economic needs require additional capital mobilization, causing the ceiling on government debt and foreign debt of the country to exceed the framework decided by the National Assembly, the Ministry of Finance reports to the Government to report to the National Assembly for decision.

Chapter IV
ORGANIZATION OF DEBT MONITORING ACTIVITIES

FOR PUBLIC DEBT AND FOREIGN DEBT OF THE COUNTRY

Article 12. Monitoring Targets

1. Agencies and units assigned tasks related to borrowing, using borrowed funds, and repaying debts in the public sector.

2. Enterprises, credit institutions, and other organizations conducting foreign borrowing and repayment under self-borrowing and self-repayment methods as prescribed by law.

Article 13. Objectives of Government Debt and Foreign Debt Monitoring

1. Ensuring debt safety, maintaining a reasonable debt portfolio within safe limits, ensuring long-term debt sustainability, financial and monetary security of the nation.

2. Identifying potential risks to the debt portfolio and issues related to debt management in relation to the domestic and international economic environment early on.

3. Assisting the main debt monitoring agency in proposing timely measures to the Government to build and adjust the debt portfolio when necessary, optimizing capital-raising options, minimizing risks and costs for the state budget and the economy.

4. Providing a basis for formulating policies, goals, and directions for capital-raising, utilization, and debt management in each phase, consistent with national socio-economic development orientations and policies.

5. Helping organizations and units using borrowed funds to monitor their investment and business operations, recognizing abnormal situations to take early corrective actions for development.

6. Enhancing financial transparency, strengthening the management of contingent liabilities.

7. Improving the effectiveness of financial analysis and forecasting work, contributing to enhancing the effectiveness of macroeconomic policy formulation and planning in each period.

Article 14. Principles for Monitoring Public Debt and Foreign Debt of the State

1. The monitoring of public debt and foreign debt indicators of the state shall be carried out continuously and regularly.

2. Ensure that regulations and guidelines must be adhered to, recommendations and proposals must be timely, specific, and feasible.

3. Costs for monitoring, analyzing, and evaluating public debt and foreign debt of the state shall be covered by the state budget.

Article 15. Contents of Supervision Activities

1. Supervise the system of safety indicators, public debt limits, and foreign debt limits of the state as stipulated in Chapters 2 and 3 of this Circular.

2. Specialized supervision (regularly, periodically) of activities related to raising, using borrowed funds, repaying debts, including:

a) Supervising and assessing the current status and effectiveness of the use of budgetary loans allocated by the state budget for investment development projects of ministries, central agencies, and localities.

b) Supervising and assessing the current status, effectiveness of the use of borrowed funds, and the ability to repay foreign loans provided by the government for relending.

c) Supervising and assessing the current status, effectiveness of the use of borrowed funds, and the ability to repay for programs/projects of enterprises and credit organizations guaranteed by the government.

d) Supervising and assessing the mobilization and repayment of enterprises and organizations through self-raising and self-repaying foreign borrowing methods.

Article 16. Requirements for Providing Information and Reporting

1. The Ministry of Finance requires monitored entities to report on the implementation of raising, using borrowed funds, repaying debts, and managing public debt and foreign debt of the state with the following main contents:

a) Purpose and requirements of reporting;

b) Scope and content of the report;

c) Outline of the report requirements;

d) Deadline for submitting reports by monitored entities;

e) Responsibilities and authorities of monitored entities;

e) Other related contents.

2. Information provision shall be implemented according to Decree No. 79/2010/ND-CP on public debt management operations and Circular No. 53/2011/TT-BTC dated April 27, 2011, of the Ministry of Finance guiding reporting forms and public information on public debt and foreign debt of the state.

3. Based on reports and information provided by monitored entities, supervisory agencies will study, analyze, evaluate relevant information and documents, and draft a supervision result report including recommendations for handling emerging issues to be submitted to competent authorities for decision.

Chapter V
RESPONSIBILITIES OF AGENCIES IN THE SUPERVISION WORK

OF PUBLIC DEBT AND FOREIGN DEBT OF THE STATE

Article 17. Responsibilities of the Ministry of Finance

1. Take the lead in macro-supervising the state of public debt, safe debt indicators, and foreign debt of the state, and report to the Prime Minister annually before June 30 of the following year.

2. Through supervision work, conduct analysis and evaluation of the sustainability of public debt and foreign debt of the state, and report to the Prime Minister and competent authorities.

3. Manage public debt limits, foreign commercial loan limits, and government guarantees for foreign loans, take the lead in coordinating with the State Bank of Vietnam to aggregate and submit to the Prime Minister for approval the annual foreign commercial loan limit of the state.

4. Coordinate with relevant agencies to conduct regular or spot checks and supervision of the situation of raising, using borrowed funds, and repaying public debt and foreign debt of the state.

Article 18. Responsibilities of the Ministry of Planning and Investment

1. Take the lead in supervising and assessing the current status and effectiveness of the use of ODA loans as prescribed by the government.

2. Participate with the Ministry of Finance in checking and supervising public debt; calculating safe debt indicators; the situation of raising, using borrowed funds, and repaying public debt and foreign debt of the state.

Article 19. Responsibilities of the State Bank of Vietnam

1. Take the lead in supervising and evaluating the current status of foreign loans of enterprises and credit organizations under the self-borrowing and self-repayment method.

2. Take the lead in building, managing, and confirming the commercial foreign borrowing limits for enterprises and credit organizations under the self-borrowing and self-repayment method.

3. Participate and coordinate with the Ministry of Finance in inspecting and supervising national foreign debt; national foreign debt safety indicators; situations regarding the mobilization, utilization of borrowed funds, and repayment of foreign debt.

Article 20. Responsibilities of Ministries, Agencies Equivalent to Ministries, and Other Central Agencies

1. Carry out inspections, supervision, evaluation of the current status and effectiveness of the use of budgetary loans provided by the state budget for programs/projects of agencies and units under their management; inspect and supervise the situation of mobilizing, utilizing borrowed funds, and repaying debts of state-owned enterprises and corporations under their respective administrative management.

2. Have the responsibility to cooperate and create conditions for inspection and supervision agencies during the inspection and supervision process.

3. Report and provide timely, complete information and bear responsibility for the contents provided related to the mobilization, utilization of borrowed funds, and repayment of public debt and national foreign debt.

Article 21. Responsibilities of People's Committees of Provinces and Municipalities Directly Under the Central Government

1. Take the lead in regularly or spot-checking the situation of mobilizing, utilizing borrowed funds, repaying debts, and managing debts of local authorities.

2. Ensure the provision of full, accurate, timely, and appropriate authority-related information on debt, debt monitoring indicators, mobilization, utilization of borrowed funds, and repayment of local authorities to the Ministry of Finance and other relevant inspection and supervision agencies.

Article 22. Responsibilities of Re-lending Institutions

1. Re-lending institutions authorized by the Ministry of Finance to carry out re-lending shall be responsible for inspecting, supervising, and evaluating the current status, effectiveness of the use of borrowed funds, and repayment of debts for programs/projects that borrow foreign loans from the government.

2. Shall have the responsibility to report and provide information on the mobilization, utilization of borrowed funds, and repayment of re-lending debts.

3. Coordinate with the Ministry of Finance in inspecting and supervising compliance with regulations on the management and use of borrowed funds and repayment of re-lending debts for authorized entities.

Article 23. Responsibilities of Economic Organizations and Credit Institutions Engaged in Borrowed Fund Utilization and Public Debt and National Foreign Debt Repayment

1. Enterprises and credit institutions engaged in the utilization of borrowed funds and public debt and national foreign debt repayment must fully comply with the provisions of the Public Debt Management Law, guiding documents implementing the Public Debt Management Law, and related documents on borrowing and repaying foreign debt, actively organize the mobilization, select the best sources of borrowing, use funds effectively, and fulfill all obligations arising from loan agreements and guarantees.

2. Subject to inspection, supervision, and creating conditions for debt management agencies to understand information and evaluate the current debt status of enterprises and credit institutions.

Chapter VI
IMPLEMENTATION

Article 24. Effective Date

This Circular takes effect from August 1, 2011.

Article 25. Implementation organization

1. Ministries, agencies equivalent to ministries, agencies under the Government, other central agencies, people's committees at all levels, and related organizations and individuals are responsible for implementing this Circular.

2. In the course of implementation, if there are difficulties, it is requested that ministries, agencies equivalent to ministries, agencies under the Government, other central agencies, people's committees at all levels, and related organizations and individuals submit their opinions to the Ministry of Finance for timely review and amendment./.