Vietnam: Repayment period and grace period of ODA loans and foreign concessional loans

On June 30, 2018, the Government of Vietnam issued Decree No. 97/2018/ND-CP on on-lending of the government's ODA loans and foreign concessional loans was issued to create a legal framework for these activities.

According to Decree No. 97/2018/ND-CP of Vietnam’s Government, the People's Committee of the province, the public sector entity or enterprise shall have the right to re-lend ODA and foreign concessional loans and must comply with the regulations on repayment period and grace period, specifically as follows:

- If the end borrower is the People's Committee of the province, the repayment period and the grace period shall comply with the regulations in the foreign loan agreement.

- If the end borrower is the public sector entity or enterprise:

+ The repayment period shall be equal to the capital recovery period under the investment project (feasibility study report) which is approved by the competent authority, but shall not exceed the grace period specified in the foreign loan agreement.

+ The grace period shall be equal to the construction period, which will last until the project is put into operation as mentioned in the investment project (feasibility study report) approved by the competent authority, but shall not exceed the grace period specified in the foreign loan agreement.

+ The repayment period and the grace period of on-lent loans shall start from the beginning of the repayment period and grace period of foreign loans.

Note: If there is any difference in the repayment period and the grace period between the foreign loans and the on-lent loans, the recovery of on-lent loans which are not paid to the foreign lender shall be included in the Accumulation Fund for Debt Payment.

View more relevant provisions at Decree No. 97/2018/ND-CP of Vietnam’s Government, effective from July 01, 2018.

- Thanh Lam -

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