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More lending conditions in the new Public Debt Management Law

09:25 | 02/02/2017

VCN - The Ministry of Finance has completed and asked for comments on the draft of Public Debt Management Law (Amendment). One of the featured content of this draft is the inclusion of re-placement of Government funds into a separate program, in that has some adjustments and supplements to the provisions in current Law.

more lending conditions in the new public debt management law
Source: Internet

Specifically, about the lenders, the draft has supplemented and adjusted regulations so that People's Committees in the provinces can compensate the deficit borrowing of local budgets for investment in social - economic development under the task of local budgets in line with the provisions of the Law on the State budget.

In terms of lending, the Vietnam Development Bank will not take responsibility for credit risk; financial institutions - credit lending will take credit risk if it happens.

Especially, in the draft, the Ministry of Finance proposed to supplement some loan conditions. That is: For the financial institution credit, it must be at least be one of the organization that ranked in the international (Standard & Poor's, Moody's and Fitch), ratings of credit ranking have to be equal or lower a notch compared to the national credit rating of Vietnam in order to approach the levels of international best practice and ensure the objectivity of the decision-lending to financial institutions credit.

For local authorities, to ensure the loan does not exceed the debt limit and deficit of local budgets in accordance with the law on the State budget.

The draft regulations also complement the principles for re-lending of government loans related to loans, only to re-lending of ODA loans and preferential loans; financial mechanism, rate and efficiency lending programs and projects; consistent with the original loan agreement by the Government; lending rates and ensure risk reserve.

The borrower must deduct loan risk provision charges due to borrowers subject gradually approached with credit practices of the market. Risk provision charges as a source of repayment of the accumulated funds. For the provincial People's Committee, the Government does not charge for risk provisions and lending in accordance with the original loan conditions.

The Ministry of Finance proposed Public Debt Management Law (Amendment) comes from the request to amend the Law on Public Debt Management in accordance with the provisions of the Constitution in 2013 and unified, synchronized with the legal system concerned enacted after the Law from 2009 to the present, and to overcome the shortcomings and limitations after more than 6 years of implementation of the Law and the requirements of management to ensure debt sustainability, safety, effectively matching the conditions of economic development - economic development of the country in the new period.

By H.Vân/Thanh Thuy