Vietnam: Eligibility conditions for receiving on-lent ODA loans and foreign concessional loans

According to Vietnam’s new regulations, Provincial People's Committees, public non-business units, and enterprises have the right to re-lend ODA and foreign concessional loans if they meet the following specific conditions:

1. A People’s Committee of province is eligible for an on-lent loan when it fulfills the following conditions:

- it has a program/projects for socio-economic development under a mid-term public investment plan of province approved by the competent authority and investment procedures thereof have been completed as per the law;

- the program/project mentioned above is funded by ODA loans or external concessional loans;

- there is no debt overdue for more than 180 days associated with an ODA on-lent loan or an external concessional loan;

- the outstanding debt of local budget at the time of applying for on-lending loans does not exceed certain amount of that as prescribed in laws and regulations on state budget; and

- the local budget commits to pay off the loan in full and on schedule.

2. A public sector entity is eligible for an on-lent loan when it fulfills the following conditions:

- it has exercised financial autonomy associated with recurrent expenditures and investment expenditures and has taken its own responsibility for capital efficiency and debt repayment as per the law;

- it has an investment project to be financed by ODA on-lent loans approved by the competent authority and has completed relevant investment procedures as per the law;

- it has a feasible financial plan approved by competent authority as prescribed in Article 38 of this Law;

- it has no overdue debt when an application for an on-lent loan is submitted; and

- the loan has been secured as per the law.

3. An enterprise is eligible for an on-lent loan when it fulfills the following conditions:

- it has legal status, established lawfully in Vietnam and operated for at least 3 years;

- it has an investment project to be financed by ODA on-lent loans approved by the competent authority and has completed relevant investment procedures as per the law;

- it has a feasible financial plan approved by competent authority as prescribed by law;

- its debt-to-equity ratio does not exceed 3 to 1 according to the last annual financial statement of the year of assessment;

- it has not incurred loss for the last 3 consecutive years according to the audit report, except for the loss incurred due to adoption of state policies as approved by competent authority;

- it has no overdue debt when the application for an on-lent loan is submitted; and

- the loan has been secured as per the law.

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

- Thanh Lam -

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