Handling risks of projects borrowing loans of local Development Investment Funds in Vietnam

Handling risks of projects borrowing loans of local Development Investment Funds in Vietnam (Internet image)

Article 19 of Decree 138/2007/ND-CP stipulates that risks incurred due to objective causes to projects borrowing loans of local Development Investment Funds in Vietnam shall be handled as follows:

- When state policy changes directly affect project activities, thus causing difficulties to investors in repaying loans, investors may be considered for debt prolongation, loan interest remission or reduction, or debt freezing;

- When natural disasters, fires or accidents occur due to objective causes, causing losses of assets, thus making investors incapable of paying debts, with certification of competent state agencies, risks shall be handled in the following order:

+ Using investors financial sources for debt retrieval according to regulations;

+ Getting insurance agencies compensations (if any);

+ Considering the remission of part or all of the remaining debts.

In addition, this Decree regulates the competence to handle risks of projects borrowing loans of local Development Investment Funds in Vietnam as follows:

- An authority which decides to provide loans may decide to prolong debts. The debt prolongation duration must not exceed one-third of the term of the loan.

- The Management Council may decide on the remission of interest debts.

- Provincial-level Peoples Committee presidents may decide to freeze debts or remit principal debts, and shall, after deciding to remit debts, report such decision to provincial-level Peoples Councils.

More details can be found in Decree 138/2007/ND-CP which comes into force from September 19, 2007.

Ty Na

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