Tighten Government guarantees: sharp decrease

VCN - According to the latest information from the Department of Debt Management and External Finance, in 2016 the total value of the granted Government guarantee was $US 170 million, significantly decreased against 2015 ($US 3.27 billion) on the guarantee value and reducing the pressures on the public debt in the coming years. 
tighten to grant the government guarantees sharp decrease Loans from China “easy but not cheap”
tighten to grant the government guarantees sharp decrease Extension of foreign currency loans by the end of 2017
tighten to grant the government guarantees sharp decrease The Law on Public Debt Management to be amended in 2017

tighten to grant the government guarantees sharp decrease

In 2016, the Department completed and signed 18 loans agreements with a total amount of $US 996 million. Photo: Nguyen Thanh

2 risk projects refused

According to Mr. Vo Huu Hien – Deputy Director of the Department of Debt Management and External Finance, one of the important matters in debt management in 2016 is tightening the issue and management of the guarantee. Until now, most national key projects and constructions which were granted Government guarantees for domestic commercial loans have transferred into the mode of self-borrowing and self-repayment without Government guarantees.

The domestic commercial banks take self-responsibility for credit risks, contributing to reduce significantly the reserve debt liability of the budget and control the growth rate of public debts.

The evaluation of granting the guarantees was implemented in direction of tightening the grant of guarantee. The Ministry of Finance refused to grant the guarantees for 2 risk and inappropriate loans projects; evaluated and reported to the Prime Minister to grant the guarantee for an investment project in the electricity field, decreasing significantly compared to 2015 and the previous years.

Thereby, the total value of granted Government guarantees in 2016 was $US 170 million, significantly decreased against 2015 ($US 3.27 billion) on the guarantee value and reduced the pressures on the public debt in the coming years.

Especially, in 2016, the Department of Debt Management and External Finance proactively collaborated with foreign banks and project investors to implement active restructuring of loans through exchanges for enterprises to pay the loans before the deadline and carry out the final accounting for some foreign loans ensured by the Government.

Total original debt balances accounted before the deadline and clearance of the guarantees in 2016 was about $US 22 million, increasing the total debt paid before the deadline in the two years 2015-2016 to nearly $US 160 million, which contributed to reduce the debt balances guaranteed by the Government. This will be a tendency to be promotied in the coming period for restructuring of the public debt.

The management of projects after granting Government guarantees was enhanced through the establishment of periodic information and report mode from the projects granted the Government guarantees and lenders, thereby building a data base to keep track of the movements of capital withdrawal, debt repayment and financial situation of the projects and enterprises which were granted Government Guarantees to supervise and discover the risks of failing to repay in a timely fashion.

Until now, all projects granted the guarantees for domestic loans implemented repayment in a timely fashion and no cases arose where the Accumulation Fund had to pay in advanced. The foreign loan projects for financial restructuring were also gradually stabilized and impossible to pay the loans in person and might not borrow the loans from the Accumulation Fund to pay the debts.

Borrowing $US 5,222 million.

According to the Department of the Debt Management and External Finance, in 2016 when Vietnam became a country with average GDP and no longer enjoying a lot of incentives of ODA loans and incentive loans, the negotiation to sign foreign loan agreements was promoted.

On 23 December, 2106, the Ministry of Finance finished the negotiations and signed 36 loan Agreements with a total value of $US 5,222 million, 1.35 times higher than the same period in 2015, contributing to the preferential capital resource to compensate for the budget overspending and development investment.

Besides, 2016 was the first year implementing the loan withdrawal under the plan in accordance with the direction of the Government in order to closely follow the annual plans of loans and debt repayment approved by the National Assembly.

Debt Management and External Finance step by step collaborated with the State Treasury and the Department of Investment to deploy the capital withdrawal, and met the requirements for disbursement for the budget and investment projects, on the other hand ensuring the close control of the capital withdrawal. The total withdrawn foreign loans was estimated at $US 3,324 million, equivalent to 73,140 billion vnd (reached 74% compared to the whole year’s plan)

In 2016, the Department has signed 18 lending agreements with total value of $US 996 million.

Although, the Decree on lending in the localities was officially promulgated, Debt Management and External Finance actively notified Ministries to expand the financial mechanism applying the lending mode in the localities on the basis of the lending ratio framework submitted by the Ministry of Finance to all projects which were governed by the localities for loans from WB, ADB, etc, and in the localities joining the projects of prevention of climate change in the Mekong Delta and enhancement of the management of land and land data base for loans from WB, and projects of primary infrastructures in the Northeast, the Central area and the Highlands.

tighten to grant the government guarantees sharp decrease Vietnam’s banking sector looks stable for 2017 despite gloomy Southeast Asia outlook: Fitch

The country still needs to address a high ratio of non-performing loans and low profitability.

In general, the mechanism of lending has been received actively by the localities, and showed remarkable progress in the access of the localities in capital mobilization, against the passive mentality, and dependence on the central authorities as before.

Building an amending Law on public debt management is a key task with strategy orientation of 2016 and 2017

Now, the Ministry of Finance has finished the research documents on contents of current regulations and matters for amending the Law on public debt management; and completed the report to the Prime Minister to submit to the National Assembly and the National Assembly Standing Committee to propose the establishment of Law on public debt management in the program of law and ordinance establishment in 2017 of the National Assembly.

It is expected that, not later than March, 2017 the Ministry of Finance will complete a first draft to get public comments on the website of the Ministry of Finance.

By Hong Van/ Huyen Trang

Related News

National Assembly’s Law Committee works with Ho Chi Minh City Customs Department

National Assembly’s Law Committee works with Ho Chi Minh City Customs Department

VCN - On December 5, 2024, a survey delegation from the Steering Commitee on Law of National Assembly, led by Ms. Tran Hong Nguyen, Vice Chairwoman of the Committee, held a working session with the Ho Chi Minh City Customs Department.
National Assembly approves appointment of new Minister of Finance Nguyen Van Thang

National Assembly approves appointment of new Minister of Finance Nguyen Van Thang

VCN – At the meeting on the afternoon of November 28, 2024, within the framework of the 8th session, the National Assembly voted to adopt a resolution approving the Prime Minister's proposal to appoint Nguyen Van Thang as Minister of Finance for the 2021-2026 term.
Agree to continue reducing VAT by 2%

Agree to continue reducing VAT by 2%

VCN - National Assembly deputies all expressed their agreement with the policy of continuing reducing value-added tax (VAT) by 2% in the first half of 2025, but there needs to be an effective support policy for sustainable development of businesses.
Amendments to the Value-Added Tax Law passed: Fertilizers to be taxed at 5%

Amendments to the Value-Added Tax Law passed: Fertilizers to be taxed at 5%

VCN - With the majority of National Assembly deputies voting in favor, the National Assembly officially approved the revised Value-Added Tax (VAT) Law during its afternoon session on November 26, 2024, as part of the 8th session's agenda.

Latest News

Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units with large asset scale and large number of inventory items, complex assets, and slow implementation progress.
The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

VCN - The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more; the average growth rate of the consumer price index (CPI) to about 4.5-5%.

More News

Fiscal, monetary policies support demand stimulation, price stabilisation

Fiscal, monetary policies support demand stimulation, price stabilisation

These efforts, in conjunction with the implementation of monetary policies and other macroeconomic policies, aim to solve difficulties for businesses and the public, stabilise the macroeconomy, control inflation, ensure the balance of the economy, promote economic growth, and secure social welfare and people’s livelihoods.
Vietnam secures VND 157 billion from state enterprise divestment in 2024

Vietnam secures VND 157 billion from state enterprise divestment in 2024

VCN - The Ministry of Finance reported that in 2024, the divestment of state capital in 5 enterprises (F1) generated VND 157 billion from an initial value of VND 145 billion
Vietnam gears up for potential inflation impact in 2025

Vietnam gears up for potential inflation impact in 2025

VCN - For sound price management and inflation control, Deputy Prime Minister Ho Duc Phoc directed officials to vigilantly track both domestic and international market dynamics. The goal is to proactively develop flexible strategies and solutions, enabling a swift response to any emerging challenges.
VN’s credit conditions in 2025 expected to be stable

VN’s credit conditions in 2025 expected to be stable

The credit conditions for Việt Nam will stabilise in 2025, after improving substantially over the past year, the rating agency VIS is forcasts.
State revenue in first month of the year equal to 14% of the estimate

State revenue in first month of the year equal to 14% of the estimate

VCN - According to the Ministry of Finance, in January - the first month of 2025, the total state budget revenue is estimated at VND275.9 trillion, equal to 14% of the estimate; meanwhile, the total state budget expenditure is estimated at VND134.4 trillion.
Securities 2025 expects a breakthrough in scale and quality

Securities 2025 expects a breakthrough in scale and quality

VCN – The positive factors inherent in the macro economy and the Vietnamese stock market will continue to create the foundation for the market to maintain stability, good liquidity, and growth in both scale and quality in the new year of At Ty 2025, Chairwoman of the State Securities Commission Vu Thi Chan Phuong said.
Cash reserves in stock accounts at six-quarter low amid margin rise

Cash reserves in stock accounts at six-quarter low amid margin rise

These funds are readily available in investor accounts, but remained undeployed as of the year-end.
Five solutions for developing stock market in 2025

Five solutions for developing stock market in 2025

VCN - On February 5, 2025, at the Gong-beating ceremony to open the stock trading at the Ho Chi Minh City Stock Exchange (HOSE), Deputy Minister of Finance Nguyen Duc Chi introduced five solutions for comprehensive development of the stock market.
Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

Minister of Finance Nguyen Van Thang works with GDVC at the first working day after the Tet holiday

VCN- On February 3, the first working day after the Tet holiday, Minister of Finance Nguyen Van Thang and the delegation visited and worked with the General Department of Vietnam Customs (GDVC).
Read More

Your care

Latest Most read
Banks set for aggressive bond issuance in 2025 to fuel growth

Banks set for aggressive bond issuance in 2025 to fuel growth

With a higher credit growth goal set by the SBV, banks are ramping up their efforts to secure funding through bond issuance.
Central bank cuts interest rate on bills for first time in 2025

Central bank cuts interest rate on bills for first time in 2025

According to data from the financial data provider Wichart, the SBV issued VNĐ19.6 trillion of bills in the past week. The interest rate on the bills decreased by 0.1 percentage point, from 4 per cent to 3.9 per cent on February 14.
Focusing on inspecting inventory of public assets at units with large and complex assets

Focusing on inspecting inventory of public assets at units with large and complex assets

VCN - According to Official Dispatch No. 1456/BTC-QLCS on inspecting the preparation and implementation of the General Inventory of Public Assets recently issued by the Ministry of Finance, the inspection of the inventory of public assets focuses on units
The government seeks approval for revised GDP, CPI targets

The government seeks approval for revised GDP, CPI targets

The Government submitted to the National Assembly for consideration and comments on adjusting the target for the growth rate of gross domestic product (GDP) to 8% or more
Fiscal, monetary policies support demand stimulation, price stabilisation

Fiscal, monetary policies support demand stimulation, price stabilisation

These efforts, in conjunction with the implementation of monetary policies and other macroeconomic policies, aim to solve difficulties for businesses and the public, stabilise the macroeconomy, control inflation, ensure the balance of the economy, promote economic growth, and secure social welfare and people’s livelihoods.
Mobile Version