What is eligibility for on-lent loans of ODA loans or external concessional loans in Vietnam?

What is eligibility for on-lent loans of ODA loans or external concessional loans in Vietnam?

What is eligibility for on-lent loans of ODA loans or external concessional loans in Vietnam? Hello, my name is Ha Anh, I am wishing to learn the provisions of the law related to public debt management activities. I have a question that I need you to help me answer. May I ask, what is eligibility for on-lent loans of ODA loans or external concessional loans? In which legal documents can I find information? Looking forward to hearing from you. Sincerely thank!

Answer:

According to the provisions of Article 36 of the Law on Public Debt Management 2017, eligibility for on-lent loans of ODA loans or external concessional loans is specified as follows:

1. A People’s Committee of province is eligible for an on-lent loan when it fulfills the following conditions:

a) it has a program/projects for socio-economic development under a mid-term public investment plan of province approved by the competent authority and investment procedures thereof have been completed as per the law;

b) the program/project mentioned in Point a of this Clause is funded by ODA loans or external concessional loans;

c) there is no debt overdue for more than 180 days associated with an ODA on-lent loan or an external concessional loan;

d) the outstanding debt of local budget at the time of applying for on-lending loans does not exceed certain amount of that as prescribed in laws and regulations on state budget; and

dd) the local budget commits to pay off the loan in full and on schedule.

2. A public sector entity is eligible for an on-lent loan when it fulfills the following conditions:

a) it has exercised financial autonomy associated with recurrent expenditures and investment expenditures and has taken its own responsibility for capital efficiency and debt repayment as per the law;

b) it has an investment project to be financed by ODA on-lent loans approved by the competent authority and has completed relevant investment procedures as per the law;

c) it has a feasible financial plan approved by competent authority as prescribed in Article 38 of this Law;

d) it has no overdue debt when an application for an on-lent loan is submitted; and

dd) the loan has been secured as per the law.

3. An enterprise is eligible for an on-lent loan when it fulfills the following conditions:

a) it has legal status, established lawfully in Vietnam and operated for at least 3 years;

b) it has an investment project to be financed by ODA on-lent loans approved by the competent authority and has completed relevant investment procedures as per the law;

c) it has a feasible financial plan approved by competent authority as prescribed in Article 38 of this Law;

d) its debt-to-equity ratio does not exceed 3 to 1 according to the last annual financial statement of the year of assessment;

dd) it has not incurred loss for the last 3 consecutive years according to the audit report, except for the loss incurred due to adoption of state policies as approved by competent authority;

e) it has no overdue debt when the application for an on-lent loan is submitted; and

g) the loan has been secured as per the law.

Above is the content of advice on eligibility for on-lent loans of ODA loans or external concessional loans in Vietnam. For more detailed information, you should refer to the Law on Public Debt Management 2017.

What are rules for on-lending of ODA loans or external concessional loans in Vietnam?

What are regulations on rules for on-lending of ODA loans or external concessional loans in Vietnam? Hello, my name is Tuan Anh, I am wishing to learn the provisions of the law related to public debt management activities. I have a question that I need you to help me answer. May I ask, what are rules for on-lending of ODA loans or external concessional loans in Vietnam? In which legal documents can I find information? Looking forward to hearing from you. Sincerely thank!

Answer:

According to the provisions of Article 34 of the Law on Public Debt Management 2017, rules for on-lending of ODA loans or external concessional loans are specified as follows:

1. The Government only on-lends ODA loans or external concessional loans; the Government does not issue sovereign bonds in the international capital market or request foreign commercial loans to on-lend them.

2. The Government shall on-lend the whole or a part of ODA loans or external concessional loans to eligible end borrowers prescribed in Clause 1 Article 33 of this Law.

3. Each loan must be on-lent in transparent and effective manner, to eligible end borrowers and with proper purposes approved by competent authorities.

4. An on-lent loan amount, maturity, and grace period shall not exceed the respective items prescribed in the external loan agreement of the Government; the on-lent currency and repayment currency is the currency in which the external loan is borrowed. If the external debt is paid back in Vietnam dong, the selling exchange rate at the time of repayment disclosed by Joint Stock Commercial Bank for Foreign Trade of Vietnam, commonly referred to as Vietcombank, shall apply.

5. On-lending interest rate includes external loan interest rate, charges specified in the loan agreement, charges for management of on-lent loans and on-lent loan loss reserves.

6. The end borrower must have a feasible financial plan approved by competent authority as prescribed in Article 38 of this Law.

What are on-lending methods of ODA loans or external concessional loans in Vietnam? 

What are regulations on on-lending methods of ODA loans or external concessional loans in Vietnam? Hello, my name is Phuong Oanh, I am wishing to learn the provisions of the law related to public debt management activities. I have a question that I need you to help me answer. May I ask, what are on-lending methods of ODA loans or external concessional loans in Vietnam? Looking forward to hearing from you. Sincerely thank!

Answer:

According to Article 35 of the Law on Public Debt Management 2017, on-lending methods of ODA loans or external concessional loans are specified as follows:

1. The Ministry of Finance shall on-lend a loan to the People’s Committee of province to carry out programs and projects for socio-economic development eligible for funding from local budget in compliance with the laws and regulations on state budget.

2. An intermediary borrower being bank for social policies authorized by the Ministry of Finance shall on-lend loans to enterprises or public sector entities to carry out programs and projects named in the list of preferred investments of state. In this case, the intermediary borrower will not take the credit risk.

3. An intermediary borrower being credit institution authorized by the Ministry of Finance shall on-lend loans to enterprises for business purposes. An intermediary borrower being credit institution must fulfill the following conditions:

a) Its credit rating graded by an international credit rating agency is equal or one level lower than its national credit rating.

b) It shall take all credit risks.

Best Regards!