Issuance of provincial bonds of Can Tho City, Vietnam

Issuance of provincial bonds of Can Tho City, Vietnam (Internet image)

Issuance of provincial bonds of Can Tho City, Vietnam

On August 21, 2024, the Can Tho City People's Committee issued Scheme 06/DA-UBND on the implementation of the issuance of provincial bonds in 2024.

Regarding the purpose of issuance, provincial bonds issued by the Can Tho City People's Committee aim to ensure the balance of development investment capital to carry out key projects under the Medium-term Public Investment Plan approved by the City People's Council in accordance with regulations.

The projects expected to use the capital generated from the issuance of provincial bonds in 2024 meet the borrowing conditions of local governments as prescribed in clause 1 Article 52 of the Public Debt Management Law: projects that have completed investment procedures according to the law, included in the local government's medium-term public investment list approved by the City People's Council in Resolution 38/NQ-HDND dated December 4, 2020, about approving the investment policy of projects in Group A, Group B, and adjusting the investment policy of Group B projects, Document 103/HDND-TT dated March 19, 2015, from the Standing Committee of the City People's Council, and Resolution 47/NQ-HDND dated August 27, 2021, from the City People's Council on the medium-term public investment plan for the 2021-2025 period in Can Tho City.

However, for the increased capital within the total investment of the projects expected to use the local government bond issuance funds, procedures are being submitted to competent authorities for consideration and adjustment of investment policy and medium-term investment plan for the 2021-2025 period at the nearest meeting of the City People's Council in 2024; the total increased capital is 2,000 billion VND over the two years 2024-2025, including the projects:

- Project to construct and upgrade and expand Provincial Road 917: estimated cost is 108.680 billion VND.

- Provincial Road 918 Project (Phase 2): estimated cost is 106 billion VND.

- Western Ring Road Project of Can Tho City (connecting National Highway 91 with National Highway 61C): estimated cost is 569.580 billion VND.

- New Resettlement Areas: estimated cost is 1,215.740 billion VND, including:

+ Cai Rang District Resettlement Area: estimated 456.940 billion VND;

+ O Mon District Resettlement Area: estimated 178.464 billion VND;

+ Phong Dien District Resettlement Area: estimated 160.312 billion VND;

+ Resettlement Area (Zone D) - Lo Vong Cung Relics Area: estimated 226.560 billion VND;

+ Thoi Lai District Resettlement Area: estimated 193.464 billion VND.

The bonds are issued to offset the local budget deficit. The bond repayment source is ensured from the city's budget. The use of funds ensures compliance with the provisions of the State Budget Law and the Public Investment Law according to principles of purposefulness, thriftiness, and effectiveness.

The projected maximum volume of bond issuance is 2,000 billion VND, distributed for 2024 as 1,000 billion VND, and for 2025 as 1,000 billion VND, ensuring it is within the total borrowing limit as specified in Resolution 45/2022/QH15 on piloting several special mechanisms and policies for the development of Can Tho City and within the annual local budget deficit decided by the National Assembly and assigned by the Prime Minister of the Government of Vietnam. The bond denomination is 100,000 VND (according to point c clause 1 Article 8 Decree 93/2018/ND-CP).

Regarding term, the provincial bonds issued by the City People's Committee have terms of 10 years and 15 years. The specific structure of each term type depends on the investors' demand and the market situation at the time of issuance.

Regarding interest rates, based on the interest rate framework announced by the Ministry of Finance and the market situation at the time of issuance, the City People's Committee decides the bond issuance interest rate for each issuance phase.

According to the Scheme, it is expected to focus on bond issuance in October 2024 with a volume of 1,000 billion VND linked to the disbursement progress of projects ensuring feasibility and effective use of funds.

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