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The Law on Public Debt Management to be amended in 2017

14:28 | 27/10/2016

VCN- On the afternoon of October 25, 2016, the Ministry of Finance held a press conference to introduce new content on the financial management of programs and projects using ODA capital and preferential loans from abroad.  It is stipulated in Circular No. 111/2016/ TT-BTC (Circular 111) of the Ministry of Finance.

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Mr. Hoang Hai chaired the press conference.

Highlight the responsibility of ministries, branches and localities

At the press conference, Mr. Hoang Hai, the Deputy Director of Debt Management and External Finance, under the Ministry of Finance said: In the past 10 years, the total capital from ODA and preferential loans has been $US 45 billion.

Since 2010, Vietnam has become a middle-income country. Thus, the amount of preferential loans of developed countries for Vietnam has been significantly reduced. Specifically, before 2010, the average loan term was 30-40 years, with an interest of 0.7-0.8% per year, but in the period 2011-2015, the average loan term was only 10-25 years, depending on foreign partners and each type of loan, with an interest of 2% or more per year. Many donors have changed from ODA loans to a mixture of loans for Vietnam.

By the end of July 2017, Vietnam will not be able to acess ODA capital, but use preferential loans and a mixture of loans under international market conditions. ODA funds will reduce the time of payment with interest rates increasing to 2% - 3.5%.

Mr. Hai said that due to problems in the financial management of programs and projects using foreign loans in recent times, and management requirements in the coming period, the Ministry of Finance has defined a number of new regulations in Circular No. 111.

This Circular will provide content more clearly on programs or projects. Besides, it also removes the provisions on the disbursement of the plan approved by competent authorities. The Circular adds some guidelines on some contents related to ODA such as procedures for expenditure control (with an agreement, a translation of the agreement and relevant records and documents); additional requirements for expenditure control in credit form or without a letter of commitment.

Accounting processes of the State budget are also regulated in more detail, including some specific tasks of the State Treasury; Provincial Treasury; the Ministry of Finance; and State agencies in the field of expenditure control.

"The clear procedures on determining financial mechanisms, disbursement of funds and budget accounting will facilitate Ministries to strengthen financial management, accelerate the disbursement rate of the Ministries for programs and projects using ODA capital, which improves the efficiency of using foreign loans and meets the requirements of State management in the coming period", Mr. Hai emphasized.

Need to use loans effectively

Speaking to the press about the effectiveness of Directive No. 02/CT-TTg (Directive No. 02) on strengthening management and improving the efficiency of the use of public debt of the Prime Minister, a representative of the Ministry of Finance said that the Ministry of Planning and Investment had prepared a separate report on this issue.

The responsibility of the Ministry of Finance in the implementation of Directive No. 02 is primarily a mechanism on management of Government guarantees and loans.

Regarding the management of Government guarantees, in 2015, the Ministry of Finance submitted to the Prime Minister to issue Decision No. 34/2015/QD-TTg which replaces Decision No 44/2011/QD-TTg on the list of priority programs and projects to be considered for Government guarantee.

One month ago, the Ministry of Finance submitted to the Government a draft Decree to replace Decree 15/2011/ND-CP on issuance and management of Government guarantees. In this draft, the Ministry of Finance mentioned a series of new requirements for evaluation of guarantees and emphasized the further management of guarantees as well as the obligations of Government-guaranteed loans and the proportion of capital, etc.

Regarding Government loans, the Ministry of Finance has submitted to the Prime Minister a draft on loans through credit institutions. This draft will be approved by the Prime Minister in the near future.

Besides, the Ministry of Finance has submitted to the Government contents on loans to the People's Committees of provinces and cities. The Government will soon chair a meeting to finalize this issue.

"In particular, on the basis of problems we have solved, the Ministry of Finance is also preparing the necessary conditions to modify and amend the Law on Public Debt Management. Accordingly, the draft law will be launched in 2017. It is a great effort of the Ministry of Finance in the implementation of Directive No. 02 of the Prime Minister", Mr. Hoang Hai stressed.

Regarding the mobilization of foreign loans in the first 9 months of 2016, Mr. Hai said: “The Government has raised 350.5 trillion vnd, which equates to 77.5% of the plan for the whole year”.

This number remains within the loan limit which has been approved by the Prime Minister.

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In the near future, when the number of ODA loans decreases and the number of preferential loans and mixture of loans increases, the Ministry of Finance should regularly give clear recommendations to project managers to carefully consider and implement projects in the most feasible and effective way.

By Hong Van/ Hoang Anh