Vietnam: Measures to secure re-lending of ODA and foreign concessional loans

11:10, 14/09/2018

In recent years, in order to obtain funding for domestic economic development, Vietnam has mobilized Official Development Assistance (ODA) to provide loans and implement economic projects. Decree No. 97/2018/ND-CP of Vietnam’s Government 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 Vietnam’s new regulations, when re-lending ODA and foreign concessional loans, the borrower must apply measures to ensure loan repayment, including:

- The end borrower shall use the asset-based lending method prescribed by law, except cases exempted from collateral.

- The collateral shall include assets originating from the Government’s on-lent loans and/or other legal assets of the end borrower. Depending on the specific case, the collateral for the loan must be approved by the Ministry of Finance or the authorized lending agency.

- The value of the collateral shall be equal to a minimum of 120% of the original value of an on-lent loan.

- If the People’s Committee of the province applies for an on-lent loan or if the end borrower cannot not offer collateral for a loan as prescribed by law, it is not required to provide any collateral.

- The duly-authorized intermediary and the end borrower shall complete the procedures for providing collateral as prescribed by the Law on secured transactions and collateral management.

- The handling of collaterals for debt recovery shall be carried out in accordance with laws. If the duly-authorized intermediary does not bear the credit risks, the handling of guarantees for debt recovery shall be approved by the Prime Minister.

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

- Thanh Lam -

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