Vietnam’s regulations on on-lending ODA loans or external concessional loans

According to Article 33 of the Law on Public Debt Management 2017 of Vietnam, eligible end borrowers of ODA on-lent loans and external concessional loans include:

- People's Committees of provinces;

- Public sector entities;

- Enterprises.

On-lending ODA loans or external concessional loans shall be implemented in compliance with the following rules:

1. The Government only on-lends ODA loans or external concessional loans; the Government does not issue sovereign bonds in the international capital market or request foreign commercial loans to on-lend them.

2. The Government shall on-lend the whole or a part of ODA loans or external concessional loans to eligible end borrowers prescribed in Clause 1 Article 33 of the Law on Public Debt Management 2017.

3. Each loan must be on-lent in a transparent and effective manner, to eligible end borrowers and with proper purposes approved by competent authorities.

4. An on-lent loan amount, maturity, and grace period shall not exceed the respective items prescribed in the external loan agreement of the Government; the on-lent currency and repayment currency is the currency in which the external loan is borrowed. If the external debt is paid back in Vietnam dong, the selling exchange rate at the time of repayment disclosed by Joint Stock Commercial Bank for Foreign Trade of Vietnam, commonly referred to as Vietcombank, shall apply.

5. On-lending interest rate includes external loan interest rate, charges specified in the loan agreement, charges for management of on-lent loans and on-lent loan loss reserves.

6. The end borrower must have a feasible financial plan approved by competent authority as prescribed in Article 38 of the Law on Public Debt Management 2017.

Relevant contents can be found in the Law on Public Debt Management 2017 of Vietnam, which was promulgated on November 23, 2017 and effective from July 01, 2018.

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