Plan for borrowing and repaying public debt in 2024 and Program for managing public debt for the period 2024–2026 in Vietnam

Plan for borrowing and repaying public debt in 2024 and Program for managing public debt for the period 2024–2026 in Vietnam (Internet image) 

On March 31, 2024, the Prime Minister issued Decision 260/QD-TTg approving the Plan for borrowing and repaying public debt in 2024 and the Program for managing public debt for the period 2024–2026.

Plan for borrowing and repaying public debt in 2024 and Program for managing public debt for the period 2024–2026 in Vietnam

The Plan for borrowing and repaying public debt in 2024 and the Program for managing public debt for the period 2024–2026, as approved by the Prime Minister, include the following main contents:

(1) Objectives:

- Ensure sufficient sources to repay public debts in a timely manner without affecting the national credit rating; continue to implement the restructuring of the Government bond portfolio in accordance with market conditions and implementation needs.

- Ensure the task of mobilizing capital through diversifying funding sources and borrowing methods both domestically and internationally to meet the needs of balancing the state budget and socio-economic development with appropriate cost-risk levels, with a focus on mobilizing foreign capital for large, strategically important projects with transitional and transformational characteristics.

- Strictly control debt safety indicators within the ceiling and warning thresholds approved by authorized agencies.

- Promote the development of the domestic capital market; maximize the utilization of foreign concessional loans.

(2) Plan for borrowing and repaying public debt in 2024:

* The Government's plan for a loan with a maximum amount of 676,057 trillion VND includes:

- Borrowing for balancing the central budget, with a maximum of 659,934 trillion VND, including borrowing to offset the central budget deficit, which is a maximum of 372,900 trillion VND, and borrowing for debt repayment not exceeding 287,034 trillion VND.

- Borrowing for refinancing: approximately 16,123 trillion VND.

Flexible mobilization sources from instruments for (i) the issuance of Government bonds, (ii) ODA loans, concessional foreign loans, and (iii) if necessary, borrowing from other legal financial sources.

* Government debt repayment is approximately 453,990 trillion VND, including direct repayment by the Government not exceeding 395,874 trillion VND, and repayment of loans for refinancing projects of approximately 58,116 trillion VND.

* Regarding the guaranteed borrowing by the Government:

- The maximum bond issuance guarantee for the Vietnam Development Bank is 1,160 trillion VND, equal to the principal repayment of bonds guaranteed by the Government due in 2024. For the Social Policy Bank: No bond issuance guaranteed by the Government in 2024.

The specific bond issuance guarantee for the Vietnam Development Bank will be determined based on the assessment of the Ministry of Finance on the proposed bond issuance guaranteed by the Government according to the provisions of Decree 91/2018/ND-CP.

- For guarantees for domestic and foreign business loans, there is no allocation of Government guarantee limit in 2024 due to projects with no capital withdrawal needs or debt repayment.

* Plan for borrowing and repaying by local authorities:

- Borrowing from refinancing sources, including government foreign loans and other sources, is approximately 30,619 trillion VND.

- Debt repayment by local authorities is approximately 6,993 trillion VND, including principal repayment of approximately 4,119 trillion VND and interest repayment of approximately 2,874 trillion VND.

(3) Foreign commercial borrowing by enterprises not guaranteed by the Government in 2024: The limit for foreign commercial borrowing in the medium and long-term by enterprises and credit institutions through self-borrowing and self-repayment is approximately 6,599 million USD; the growth rate of short-term foreign debt is expected to be around 18–20% compared to the outstanding debt as of December 31, 2023.

(4) The borrowing and debt repayment plan for 2024 will be implemented within the maximum levels stated in (2) and (3); in case there is a need that exceeds the maximum levels mentioned above, the Ministry of Finance will propose an adjustment plan to the Prime Minister.

(5) Program for managing public debt for the period 2024–2026:

* Regarding borrowing and debt repayment by the Government:

- The total borrowing of the Government in the period 2024–2026 is estimated to be around 1,862.2 trillion VND, including borrowing for the central budget of approximately 1,818.3 trillion VND and borrowing for refinancing of approximately 43.9 trillion VND.

- The total debt repayment by the Government in the period 2024–2026 is estimated to be a maximum of 1,102.8 trillion VND, including direct repayment of approximately 976.4 trillion VND and repayment of refinancing loans of approximately 126.4 trillion VND.

- Actively arranging sources to fulfill the debt repayment obligations of the Government, avoiding overdue debts that may affect the Government's international commitments.

* Regarding the guaranteed borrowing by the Government:

- For guarantees for the issuance of bonds by 02 policy banks: the maximum guarantee for the Vietnam Development Bank in the period 2024–2026 is 8,620 trillion VND, and the maximum guarantee for the Social Policy Bank in the period 2024–2026 is 11,590 trillion VND; equivalent to the principal repayment of the government-guaranteed bonds due in the period 2024–2026.

- Strictly adhering to the objective of tightly controlling the level of government guarantees for loans within the authorized guarantee limit; the withdrawal of capital should not exceed the principal repayment obligation within the year.

* Regarding borrowing and debt repayment by local authorities: control the excess expenditure and debt of local authorities in accordance with the provisions of the State Budget Law, Resolutions of the National Assembly on pilot mechanisms, special policies of certain localities, and Resolution 23/2021/QH15 on the National Financial Plan and public borrowing and debt repayment for the 5-year period 2021-2025.

More details can be found in Decision 260/QD-TTg, taking effect on March 31, 2024.

Ho Quoc Tuan

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