Decree No. 97/2018/ND-CP: Vietnam’s new regulations on repayment on on-lent loans

Repayment on on-lent loans is specified in Decree No. 97/2018/ND-CP of Vietnam’s Government as follows:

- The end borrower shall allocate budget from the financial plan or budget estimates of the end borrower in order to make full repayment on time as prescribed in the on-lending agreement. The repayment shall not depend on the progress of implementing the commercial contracts on on-lent loans.

- The end borrower shall make a repayment on on-lent loans before repaying other debts.

- The end borrower which is a public sector entity or enterprise shall open an account for collecting revenue earned from the on-lent project and other legal sources of revenue earned by the duly-authorized intermediary in order to prepare the repayment and maintain the minimum balance of the account.

- When signing the on-lending agreement, the end borrower shall irrevocably authorize the duly-authorized intermediary to deduct any of its account in order to recover debt if it cannot make full repayment on time; it is an irrevocable authorization.

- Within 2 working days from the date on which the repayment from the end borrower is received, the intermediary or the duly-authorized intermediary shall transfer the total repayment to the Accumulation Fund for Debt Payment after deducting the management fees of on-lent loans.

Decree No. 97/2018/ND-CP also stipulates the pre-maturity payment as follows:

- The end borrower may pay debt before maturity if it satisfies the requirements for pre-maturity payment as prescribed in the foreign loan agreement and if it is approved by the Ministry of Finance.

- If there is no regulation on pre-maturity payment in the foreign loan agreement, the end borrower shall only make a pre-maturity payment when it is approved by the Prime Minister (if the duly-authorized intermediary does not bear the credit risks) or by the duly-authorized intermediary (if this agency bears the credit risks).

- The end borrower shall send a request document to the Ministry of Finance and the duly-authorized intermediary within 90 days before the repayment due date in order to make a pre-maturity payment; the Ministry of Finance or the duly-authorized intermediary shall communicate with the foreign lender and report about this request to the competent authority for consideration and decision-making.

- The end borrower shall pay all the charges and costs when making a pre-maturity payment.

Decree No. 97/2018/ND-CP of Vietnam’s Government takes effect from July 01, 2018, replacing Decree No. 52/2017/ND-CP.

- Thanh Lam-

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