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PM approves loan and debt repayment programs

Released at: 12:21, 04/05/2017

PM approves loan and debt repayment programs

Photo: VGP

Government to borrow $15 billion and repay $11.4 billion in debts during 2017.

by Duy Anh

Prime Minister Nguyen Xuan Phuc has approved the government’s loan and debt repayment programs together with threshold limits for borrowings in 2017.

The government’s borrowing plan in 2017 totals VND342.06 trillion ($15.04 billion), including domestic loans of VND243.3 trillion ($10.7 billion) and official development assistance (ODA) loans and foreign preferential loans of VND98.76 trillion ($4.34 billion).

VND316.3 trillion ($13.9 billion) will be used to balance the State budget, with VND172.3 trillion ($7.6 billion) covering the budget deficit and VND144 trillion ($6.3 billion) repaying original government debts. The remaining VND25.76 trillion ($1.14 billion) will be used for re-lending.

The government’s debt repayment program for 2017 is set at VND260.15 trillion ($11.44 billion), of which VND242.9 trillion ($10.68 billion) is for repaying direct government debts and VND17.25 trillion ($758.65 million) for re-lending projects.

PM Phuc also approved the thresholds on government guaranteed loans and mid and long-term foreign loans by enterprises and credit institutions via direct borrowing and the repayment method of borrowers, including:

Threshold for the domestic issuance of government-guaranteed bonds by the Vietnam Bank for Social Policies: VND9.25 trillion ($406.8 million).

Threshold for government-guaranteed domestic loans (net capital withdrawal quota) for national key projects: VND8 trillion ($352 million).

Threshold for government-guaranteed foreign loans by enterprises and credit institutions: $700 million.

Threshold for foreign loans by enterprises and credit institutions via the direct borrowing and repayment method: $5.5 billion.

Threshold limit for local government loans: VND23.857 trillion ($1.05 billion).

The Ministry of Finance is authorized to review, as necessary, the thresholds within a plan to issue government-guaranteed bonds worth VND25.145 trillion ($1.1 billion) by the Vietnam Development Bank.

The PM also authorized the Ministry of Planning and Investment to finish allocating capital for construction of programs and projects funded by ODA loans, as well as to allocate undistributed preferential loans within the VND60 trillion ($2.64 billion) quota approved earlier by the National Assembly.

The State Bank of Vietnam is tasked with supervising foreign loans by enterprises and credit institutions via the direct borrowing and repayment method within the approved threshold.

According to a recently-approved medium-term debt management program for 2016-2018, Vietnam targets keeping public debt, comprising central government debt, government-backed loans, and local government debt, at less than 65 per cent of GDP during the two-year period.

It sets a ceiling on outstanding central government debt of 54 per cent of GDP and for the country’s foreign debt of 50 per cent of GDP. Domestic and foreign loans taken to make up for State budget overspending, which made up 5.4 per cent of GDP in 2016, are expected to decline. 

The program stipulates that some VND606.4 trillion ($26.69 billion) will be sourced from central government loans to make up for State budget overspending from 2016 to 2018. 

This includes about VND247.2 trillion ($10.88 billion) in 2016, VND172.3 trillion ($7.59 billion) in 2017, and VND186.9 trillion ($8.22 billion) in 2018. Central budget overspending is targeted at 3.38 per cent of GDP in 2017 and 3.3 per cent in 2018.

Under the newly-approved plan, the central government will not provide guarantees for new domestic and external loans. The list of programs and projects set to receive government guarantees will be reviewed to calculate the exact level of government guarantee.

Meanwhile, the cap on local budget overspending is set at some VND6 trillion ($264 million) in 2017 and VND11.1 trillion ($488.51 million) in 2018, in accordance with the 2015 Law on the State Budget.

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