Vietnam: Provincial government’s 5-year borrowing and repayment plan

According to Decree No. 93/2018/ND-CP of Vietnam’s Government, the 5-year borrowing and repayment plan of a provincial government is a part of its 5-year financial plan, and formulated and reported by the Provincial Finance Department to the Provincial People's Committee for submission to the Provincial People's Council for reference before it is submitted to the Ministry of Finance for consolidation.

Grounds for formulating plan

A provincial government’s 5-year borrowing and repayment plan shall be formulated based on the following grounds:

- The provincial government’s implementation of the 5-year socio – economic development plan, the 5-year financial plan, the medium-term public investment plan, and the 5-year borrowing and repayment plan in the previous period;

- Socio-economic & finance – state budget objectives, targets and orientations included in the national 5-year socio-economic development strategies and plans; strategies for finance, public debts and tax system reform; and socio-economic development objectives, targets and orientations in the 5-year planning period of the provincial government; its master plan for socio-economic development approved by a competent authority;

- Socio-economic developments which may affect the provincial government's ability to mobilize and use finance - state budget resources in the 5-year planning period;

- Current regulations on finance and state budget, including the mechanism for managing and assigning state budget revenue sources and spending tasks between central-government budget and provincial-government budget, and between provincial governments; orientations for revision and promulgation of the law on finance-state budget in the 5-year planning period;

- Directions of the Prime Minister and by the Provincial People's Committee on formulation of 5-year socio – economic development plans and 5-year financial plans.

Requirements on formulation of 5-year borrowing and repayment plan

Requirements on formulation of 5-year borrowing and repayment plan are specified as follows:

- Being conformable with the objectives, tasks and solutions provided in the national socio-economic development strategy; strategies for finance, public debts and tax system reform; and with national and provincial socio-economic development objectives, targets and orientations in each 5-year planning period;

- Being conformable with forecasts about the socio-economic developments, the ability to balance state budget revenue sources, raise funds and repay debts as well as the requirements on national financial safety limits in the 5-year planning period; being conformable with the principles for balancing, managing and assigning state budget revenue sources and spending tasks, principles for public debt management and the provincial government’s maximum allowable outstanding balance;

- Prioritizing the allocation of state budget funds and borrowed funds for implementation of programs and projects in each period;

- Ensuring publicity, transparency and effectiveness.

Contents of a provincial government’s 05-year borrowing and repayment plan

- Evaluation of the implementation of the 5-year borrowing and repayment plan in the previous period, achievements, shortcomings, limitations and reasons therefor, and drawn lessons and experiences;

- Grounds for formulating the provincial government’s 05-year borrowing and repayment plan;

- Indicators of the provincial government’s 05-year borrowing and repayment plan, including: debt limit, outstanding balance of the provincial government (ratio of its outstanding balance to debt limit); estimated borrowed amounts and repayment amounts;

- Forecasts about risks which might affect the provincial-government debt management indicators;

- Regulatory and managerial solutions for ensuring provincial-government budget safety and sustainability.

The order of formulation and approval for a provincial government’s 5-year borrowing and repayment plan shall be the same as that of formulation and approval for 5-year financial plans of provincial governments set forth in Article 9 of Decree No. 45/2017/ND-CP of Vietnam’s Government.

Adjustment of a provincial government’s 5-year borrowing and repayment plan shall follow regulations in Article 10 and Clause 5 Article 11 of Decree No. 45/2017/ND-CP.

Decree No. 93/2018/ND-CP of Vietnam’s Government takes effect from July 01, 2018.

-Thao Uyen-

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