Vietnam: What types of public debt are there? What are the principles of public debt management according to current regulations?
What types of public debt are there?
Pursuant to Article 4 of the 2017 Law on Public Debt Management in Vietnam, public debt includes: Government debts, Sovereign-guaranteed debts and Provincial debts.
To be specific:
- Government debts include:
+ Debts arising from issue of debt instruments by the Government;
+ Debts arising from internal and external loan agreements concluded by the Government;
+ Debts arising from central government budget’s loans borrowed from financial reserve fund of state, state funds available on State Treasury’s accounts, or off-budget financial fund.
- Sovereign-guaranteed debts include:
+ Debts of enterprises guaranteed by the Government;
+ Debts of banks for social policies guaranteed by the Government.
- Provincial debts include:
+ Debts arising from issue of provincial bonds;
+ Debts arising from ODA on-lent loans, external concessional loans;
+ Debts arising from local government budget’s loans borrowed from banks for social policies, financial reserve fund of provinces, state funds, and other loans as per the law on state budget.
Vietnam: What types of public debt are there? What are the principles of public debt management according to current regulations? (Image from the Internet)
What are the principles of public debt management according to current regulations?
Principles for public debt management are implemented in accordance with Article 5 of the 2017 Law on Public Debt Management in Vietnam as follows:
- The state shall uniformly manage public debts and ensure that entities in connection with public debt management shall fulfill their responsibilities and exercise their power as prescribed.
- Strictly control indicators of public debt safety, ensure a safe and sustainable national finance with macroeconomic stability.
- Any proposal, appraisal, and approval for a borrowing policy, negotiation and conclusion of loan agreement, issue of debt instruments, or allocation and use of loans must be carried out with proper purposes and effectiveness. A loan granted for financing budget deficit is only used for development investment, not recurrent expenditures.
- A borrower, end borrower, or sovereign-guaranteed borrower shall discharge obligations tied to a loan, an on-lent loan or a sovereign-guaranteed loan respectively fully and on schedule. An ODA on-lent loan, external concessional loan, or sovereign-guaranteed loan may not be converted into allocated capital of state budget.
- Ensure that any public debt is calculated accurately and sufficiently; ensure the transparency in public debt management associated with responsibilities of relevant entities in public debt management.
What are the responsibilities of ministries and ministerial-level agencies in public debt management in Vietnam?
Pursuant to the provisions of Article 15 of the 2017 Law on Public Debt Management in Vietnam, the responsibilities of ministries and ministerial-level agencies in public debt management is determined as follows:
- The Ministry of Finance shall:
+ Formulate a legislative document on public debt management, and then promulgate it within competence or request a competent authority to promulgate it;
+ Make a 5-year public borrowing and repayment plan or an annual report on borrowing and repayment amount of state budget and submit it to the Government; the Government shall then submit it to the Government for ratification or adjustments;
+ Make a plan for issue of development bonds and submit it to the Government; the Government shall then submit it to the Standing Committee of National Assembly for ratification;
+ Make a plan for annual limits on loans to be on-lent and Sovereign-guaranteed loans and a scheme for issuing sovereign bonds in the international capital market and submit them to the Government for approval;
+ Make the following plans: 3-year public debt management program, annual public borrowing and repayment plans, issues of sovereign bonds in international capital market, use of debt repayment fund to resolve problems associated with on-lending and sovereign guarantees, schemes for debt restructuring, negotiation, conclusion, approval and adjustments of external loan agreements in the name of the Government, on-lending, issue of sovereign guarantees for every program/project, and then submit them to the Government for approval;
+ Make a plan for negotiation, conclusion, approval and adjustments of ODA loan agreements or external concessional loans in the name of the State and submit it to Prime Minister, the Prime Minister shall then submit it to the State President for approval;
+ Raise funds, issue debt instruments of the Government in the domestic and international capital market; take charge of negotiating and concluding trade loan agreements, framework agreements, agreements on ODA loans and external concessional loans in the name of the State and the Government;
+ Allocate capital to investment programs and projects financed by borrowed capital of the Government as per the law on state budget;
+ On-lend ODA loans or external concessional loans as prescribed by the Prime Minister;
+ Pay principal, interests, and other related fees associated with the Government’s debts;
+ Issue and manage sovereign guarantees according to decisions of the Prime Minister;
+ Manage the debt repayment fund;
+ Manage debt portfolio, implement schemes for debt restructuring and responses to risks according to decisions of the Prime Minister;
+ Do accounting for government debts; release statistics on, report and publish information about public debts as per the law;
+ Inspect and examine the observance of the law on public debt management.
- Ministries and ministerial-level agencies cooperate with the Ministry of Finance in performing the roles of regulatory agencies in public debts as assigned by the Government.
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