06 Prohibited acts in public debt management in Vietnam

06 Prohibited acts in public debt management in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What are the types of public debt?

According to Article 4 of the Law on Public Debt Management 2017, public debt includes the following types of ties:

(1) Government debts include:

- Debts arising from issue of debt instruments by the Government;

- Debts arising from internal and external loan agreements concluded by the Government;

- Debts arising from central government budget’s loans borrowed from financial reserve fund of state, state funds available on State Treasury’s accounts (hereinafter referred to as state funds), or off-budget financial fund.

(2) Sovereign-guaranteed debts include:

- Debts of enterprises guaranteed by the Government;

- Debts of banks for social policies guaranteed by the Government.

(3) Provincial debts include:

- Debts arising from issue of provincial bonds;

- Debts arising from ODA on-lent loans, external concessional loans;

- Debts arising from local government budget’s loans borrowed from banks for social policies, financial reserve fund of provinces, state funds, and other loans as per the law on state budget.

2. 06 Prohibited acts in public debt management in Vietnam

Specifically, Article 8 of the Law on Public Debt Management 2017, prohibited acts in public debt management include:

(1) Borrowing, lending, and guaranteeing loans ultra vires, without approval of competent authorities, or exceeding the limits decided by competent authorities.

(2) Using loans for improper purposes or by improper persons, exceeding the prescribed limits; or failure to make debt repayment properly.

(3) Taking advantage of one’s position to appropriate or embezzle in public debt management and use.

(4) Failing to comply with regulations on public debt management; causing loss or waste of loans due to irresponsibility.

(5) Failing to provide or provide insufficient, untimely, and inaccurate information on public debts as per the law.

(6) Obstructing the supervision, inspection, audit and actions against violations of laws and regulations on public debt management.

3. Principles for public debt management in Vietnam

Principles for public debt management specified in Article 5 of the Law on Public Debt Management 2017, specifically as follows:

- The state shall uniformly manage public debts and ensure that entities in connection with public debt management shall fulfill their responsibilities and exercise their power as prescribed.

- Strictly control indicators of public debt safety, ensure a safe and sustainable national finance with macroeconomic stability.

- Any proposal, appraisal, and approval for a borrowing policy, negotiation and conclusion of loan agreement, issue of debt instruments, or allocation and use of loans must be carried out with proper purposes and effectiveness.

A loan granted for financing budget deficit is only used for development investment, not recurrent expenditures.

- A borrower, end borrower, or sovereign-guaranteed borrower shall discharge obligations tied to a loan, an on-lent loan or a sovereign-guaranteed loan respectively fully and on schedule.

An ODA on-lent loan, external concessional loan, or sovereign-guaranteed loan may not be converted into allocated capital of state budget.

- Ensure that any public debt is calculated accurately and sufficiently; ensure the transparency in public debt management associated with responsibilities of relevant entities in public debt management.

4. State management of public debts in Vietnam

The State shall manage public debt through the following contents:

- Promulgate and implement legislative documents on public debt management.

- Formulate and implement programs, plans, solutions, and policies on public debt management.

- Perform public debt management, including proposal, appraisal, and approval for borrowing policies; negotiation and conclusion of loan agreements; issue of debt instruments, allocation and use of loans, debt repayment and public debt management transactions.

- Monitor and provide information about public debt management and use, and assess effectiveness thereof.

- Inspect and audit the observance of the law on public debt management.

- Give commendation, take actions against violations, and handle complaints and denunciation in terms of public debt management.

(Article 6 of the Law on Public Debt Management 2017)

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE