Vietnam’s regulations on government guarantee fees

Specifically, according to Decree No. 91/2018/ND-CP of Vietnam’s Government, government guarantee fees are specified as follows:

Government guarantee fees

Based on the results of appraising the investment project’s financial plan and the enterprise’s financial health, the Ministry of Finance shall determine the guarantee fee which does not exceed 2% per year of total outstanding debt of the guaranteed loan.

The government guarantee fee incurred by the enterprise is the sum of:

- The fee calculated according to the average DSCR within 05 first years of the investment project; and

- The fee calculated according to the enterprise’s financial health at the time when it submits an application for government guarantee.

The government guarantee fees are available in the Fee Schedule of the Appendix II enclosed herewith.

Collection and transfer of government guarantee fees

According to Decree No. 91/2018/ND-CP, the guarantee fee is charged on the outstanding principal amount of the government-guaranteed loan, or bond issue, according to the loan currency and the guarantee fee approved by the Prime Minister as from the date of the first withdrawal of funds or the date of payment of bond buying amounts.

- The guarantee fee is calculated in the currency of the guaranteed loan and exchanged into VND according to the selling rate officially announced by Vietcombank at the time of payment of guarantee fee; the guarantee fee must be paid to the Accumulation Fund for Debt Repayment on the date of payment of interests on the government-guaranteed loan or bonds.

- Within 10 days after the payment date, if the Ministry of Finance does not yet receive the payment of guarantee fee, the obligor must incur the late payment interest charged on the unpaid guarantee fee. To be specific:

+ The late payment interest is charged on total days of late payment commencing from the due date to the date on which guarantee fee is paid in full;

+ The interest rate charged on the late payment of guarantee fee is equal to the interest rate charged on the guaranteed loan or bond issue;

+ If the floating interest rate is charged on the loan or bond issue, the late payment interest shall be determined by the Ministry of Finance based on the reference rate applied for the payment period of interests charged on the government-guaranteed loan or bond issue.

Use of government guarantee fee

- The guarantee fees are considered revenues of the Accumulation Fund for Debt Repayment that shall manage and use collected guarantee fees in a proper way, including fulfillment of the guarantor's obligations.

- The Ministry of Finance may use 1.5% of the total amount of guarantee fees actually collected to cover expenditures that arise in course of managing government guarantees upon the approval of the Prime Minister.

- The Minister of Finance shall decide the use of retained amounts for administrative expenditures to pay costs of hiring independent consultants/ experts when appraising applications for government guarantee, if any.

View more details at Decree No. 91/2018/ND-CP of Vietnam’s Government, effective from July 01, 2018.

-Thao Uyen-

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