Promulgation of the New Circular on Financial Management of Investment Projects under the PPP Model

According to the regulations, the loan interest rate referenced for negotiation and agreement must not exceed 1.3 times the simple average of the Government of Vietnam's 10-year bond issuance interest rate.

Circular 75/2017/TT-BTC amends and supplements the regulations on loan interest for investment capital mobilization.

To be specific, the loan interest rate calculated in the case of investor appointment according to current regulations in Circular 55/2016/TT-BTC is as follows: The loan interest rate is determined through negotiation and agreement between the competent state agency and the investor. The referenced loan interest rate for negotiation and agreement must not exceed 1.3 times the simple average of the Government of Vietnam's 10-year bond issuance interest rate issued through the auction method within 3 months before the project contract negotiation time.

With this regulation, Circular 75 amends and supplements as follows: In the case of investor appointment, the loan interest rate is determined through negotiation and agreement between the competent state agency and the investor.

The referenced loan interest rate for negotiation and agreement must comply with the principles: Not exceeding 1.5 times the simple average of the successful auction interest rate of the Government of Vietnam's bonds with a term corresponding to the project contract's implementation period (project contract) in the 10 successful auction sessions before the project contract negotiation time. The successful auction interest rate of the Government of Vietnam's bonds is published on the electronic information portal of the State Treasury or the Hanoi Stock Exchange.

In case the number of successful auction sessions of the Government of Vietnam's bonds with a term corresponding to the project contract's implementation period within 6 months before the project contract negotiation time is less than 10 sessions, the referenced loan interest rate for negotiation and agreement must not exceed 1.5 times the simple average of the successful auction interest rate of the Government of Vietnam's bonds with a corresponding term within 6 months before the project negotiation time.

Not exceeding the average medium and long-term loan interest rate of the 04 state-owned commercial banks at the project contract negotiation time.

Circular 75 also supplements the content: The Government of Vietnam's bonds with a term corresponding to the project contract period are determined as follows: Project contracts with an implementation period of 10 years or less will use the Government of Vietnam's 10-year bond interest rate to determine the loan interest rate.

Project contracts with an implementation period of more than 10 years and up to 15 years: Use the Government of Vietnam's 15-year bond interest rate to determine the loan interest rate.

Project contracts with an implementation period of more than 15 years: Use the Government of Vietnam's 20-year bond interest rate to determine the loan interest rate.

Circular 75/2017/TT-BTC came into effect from September 5, 2017.

Source: Investment Newspaper

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