Risk warning on loans guaranteed by the Government

Illustration image. Source: Internet

Ministry of Finance said that in two years 2016 and 2017, the Ministry Inspectorate has cooperated with the Department of Debt Management and External Finance and other units under the Ministry of Finance in order to participate in 10 delegations for supervising public debts in the enterprises borrowed foreign funds that are guaranteed by the Government, with loans ranging from 1,200 billion vnd to over 60,000 billion vnd.

Through the supervision, it aims to evaluate the implementation of the project, the financial status of the project, the situation of business management and production, the situation of withdrawal and repayment of foreign loans by the Government. The Ministry of Finance said that although it has been restructured financially, there is a risk on the of loan repayment which is guaranteed by the Government in these units because it still depends on the support from the parent company and could not repay debts by themselves from business production revenues of the project.

According to the company's financial report, although the fact that its subsidiary companies operation starts to gain profitable, it’s financial capacity and source of repayment is still difficult.

In addition, the investment rate of the factory is high (construction costs, facilities costs, and other costs), the technologies of some fields such as cement and small hydropower are mainly from China. Thus the products are difficult to compete in the market. As a consequence, the production in moderation, the production results of many companies are not high (even losses in recent years), it leads to losing the ability to repay.

According to the Ministry of Finance, the coordination of supervising projects guaranteed by the Government and re-lent by the Ministry Inspectorate, External Debt and Financial Management Department and related units are aimed to ensure that loans guaranteed by the Government are used efficiently and ensure the ability to pay debts.