Thông tư 56/2011/TT-BTC

CIRCULAR

PROVIDING GUIDANCE ON THE CALCULATION OF SUPERVISION CRITERIA AND THE SUPERVISION OF PUBLIC DEBTS AND NATIONAL FOREIGN DEBTS

Pursuant to the Law on Public debt management dated June 17^th 2009;

Pursuant to the Government's Decree No. 118/2008/ND-CP dated November 27^th 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance ;

Pursuant to the Government's Decree No. 79/2010/ND-CP dated July 14^th 2010 on public debt management;

The Ministry of Finance provides guidance on the calculation of supervision criteria and the supervision of public debts and national foreign debts as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular provide guidance on the calculation of criteria for supervising public debts and foreign debts prescribed in Article 7 of the Government's Decree No.  79/2010/ND-CP dated July 14^th 2010 on public debt management (hereinafter referred to as the Decree No. 79/2010/ND-CP) and the supervision of public debs prescribed in Article 8 of the Decree No. 79/2010/ND-CP

Article 2. Interpretation of terms

In this Circular the terms interrelated in Article 3 of the Law on Public debt management and Article 2 of the Decree No. 79/2010/ND-CP shall apply. The terms below are construed as follows:

1. Debt safety criteria mean a system of criteria that specify the maximum limits of debts decided by the National Assembly in each stage to ensure national debt security.

2. Debt supervision mean relevant state authorities supervising debts, analyzing and assessing level of risks to the debt portfolio, and making appropriate amendments to the policies on debt management via the system of debt supervision criteria

3. The system of debt supervision criteria includes indicators that reflect the public debts and national foreign debts and the solvency in comparison with macroeconomic criteria.

4. Total outstanding debt means the aggregated amount of disbursed loans that has not been repaid or not written off when the loan is taken as prescribed by Vietnam’s law.

5. Debt liability means the total amount payable, including the principal, interest, and fee over a certain period of time.

6. Overdue debt means a debt of which part or the whole principal and/or interest is overdue at a certain time.

7. Short-term debt means a debt that is due within 1 year.

8. Gross domestic product (GDP) means the new value of goods and services created by the whole economy over a certain period of time at actual prices, according to the data announced by General Statistics Office.

9. Foreign-exchange reserves means assets in foreign currencies in the monetary balance sheet of the State bank of Vietnam, according to the data announced by the State bank of Vietnam as prescribed by current laws.

10. Export turnover means the value of goods and services exported during the supervision period, according to the data announced by General Statistics Office.

11. The State budget revenues include revenues from taxes, fees, economic activities of the State, contributions of organizations and individuals, aids, and other revenues as prescribed by law.

12. The exchange rates between VND and foreign currencies for calculating debt criteria in foreign currencies shall be announced by the Ministry of Finance.

Chapter II

SYSTEM OF CRITERIA FOR SUPERVISING PUBLIC DEBTS AND NATIONAL FOREIGN DEBTS

Article 3. Criteria for supervising public debts and national foreign debts

The system of criteria for supervising public debts and national foreign debts is specified in Article 7 of the Decree No. 79/2010/ND-CP

Article 4. Method of establishing criteria for public debt supervision

1. Ratio of public debt to GDP:

a) This ratio reflects the proportion of public debt to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

2. Ratio of government debt to GDP:

a) This ratio reflects the proportion of public debt to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

3. Ratio of commercial debt of the Government to GDP

a) This ratio reflects the proportion of commercial debt of the Government to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

4. Ratio of debt guaranteed by the Government to GDP:

a) This ratio reflects the proportion of debt guaranteed by the Government to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

5. Ratio of debt liabilities of the Government to State budget revenues:

5.1. Repayment of loans (including principal, interest, and fees) taken by the Government to balance the budget:

a) This ratio reflects the proportion of the loans taken by the Government to balance the budget annually to the ability to repay debts of the Government using State budget revenues on December 31^st every year.

b) This ratio is calculated as follows:

5.2. Repayment of loans (including principal, interest, and fees) taken by the Government for on-lending:

a) This ratio reflects the proportion of indirect debts of the Government that are due every year to State budget revenues:

b) This ratio is calculated as follows:

6. Ratio of contingent liabilities of the Government to State budget revenues:

a) This ratio reflects the proportion of contingent liabilities derived from loans and issuance of bonds guaranteed by the Government to State budget revenues on December 31^st.

b) This ratio is calculated as follows:

7. Ratio of municipal debts to GDP:

a) This ratio reflects the proportion of debts of all local governments to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

Article 5. Method of establishing criteria for supervising foreign debts

1. Ratio of national foreign debt to GDP:

a) This ratio reflects the proportion of outstanding national foreign debt to the income of the whole economy on December 31^st every year.

b) This ratio is calculated as follows:

2. Ratio of annual repayment of national foreign debt (principal, interest, fees) to export turnover:

a) This ratio reflects the ability to repay foreign debt from export turnover, and reflect the liquidity of foreign debt on December 31^st every year.

b) This ratio is calculated as follows:

3. Ratio of foreign-exchange reserves to short-term foreign debts:

a) This ratio reflects the ability to repay short-term foreign debts from foreign-exchange reserves on December 31^st every year.

b) This ratio is calculated as follows:

Article 6. Criteria for supervising overdue debts

Ratio of overdue debts to the loans taken by the Government for on-lending:

a) This ratio reflects the proportion of overdue debts to the loans taken by the Government for on-lending on December 31^st every year.

b) This ratio is calculated as follows:

2. Ratio of overdue debts to the loans guaranteed by the Government:

a) This ratio reflects the proportion of overdue debts to the loans guaranteed by the Government on December 31^st every year.

b) This ratio is calculated as follows:

3. Ratio of overdue debts to non-guaranteed foreign loans:

a) This ratio reflects the proportion of overdue debts to total outstanding non-guaranteed foreign loans (including short-term, mid-term, and long-term loans) on December 31^st every year.

b) This ratio is calculated as follows:

Article 7. Criteria for term structure of interest rates

1. The structure of long-term/mid-term debts – short-term debts, applicable to public debts and national foreign debts.

2. Structure of domestic loans (treasury bills, bonds) and foreign loans (ODA, incentives) taken by the Government.

3. The average interest rate is calculated based on the weighted mean of loans with various loan conditions.

4. The average loan term is calculated based on the weighted mean of various terms.

Article 8. System of criteria for assessing debt management

1. The system of criteria for  assessing debt management shall help assess the strengths and weaknesses in the debt management of a country, including:

a) The formulation of the debt strategy, assessment of legal environment, organizational structure, implementation of the debt strategy, assessment of debt management and audit.

b) The combination of macroeconomic policies, primarily monetary and fiscal policies.

c) The debt management, including raising and using loans to repay debts; guarantee, on-lending, and risk management techniques.

d) Cash flow forecast and management of the balance of payments

dd) The management of risk in the operation of relevant debt management agencies, including data security and supervision, task assignment, employees’ capability.

e) The retention and reports on public debts and national foreign debts.

2. Managing authorities shall monitor the public debt management via the system of criteria for assessing debt management.

Chapter III

LIMITS ON PUBLIC DEBTS, FOREIGN COMMERCIAL LOANS, AND FOREIGN LOAN GUARANTEE OF THE GOVERNMENT

Article 9. Limits on public debts

1. Limits on public debts are maximum ratios of outstanding public debt to GDP at certain times decided by competent authorities.

2. Limits on public debt include:

a) Domestic and foreign debts of the Government

b) Debts of domestic and foreign enterprises and organizations guaranteed by the Government.

c) Debts of local governments from the issuance or authorized issuance of municipal bonds, loans from other legal financial sources as prescribed by law.

Article 10. Limits on foreign commercial loans, and foreign loan guarantee of the Government every year

1. The limit on foreign commercial loan is the maximum level of the annual net borrowing (the actual loan received after deducting the principal)

2. Depending on the demand, the capital mobilization, and public debt limits, the Ministry of Finance shall impose the limits on foreign commercial loans and foreign commercial loan guarantee, then submit them to the Prime Minister for approval.

Article 11. Limit management

1. Annually, according to limits on public debts and national foreign debts approved by the National Assembly in each stage and the Prime Minister’s Decisions on the limits on foreign commercial loans, foreign commercial loan guarantee, and limits on non-guaranteed foreign commercial loans, the Ministry of Finance shall cooperate with the State bank of Vietnam in managing and supervising such limits in order or ensure the fulfillment of debt safety criteria approved by competent authorities.

2. Enterprises shall register their demands for foreign loans guaranteed by the Government in the next year for the Ministry of Finance, and for loans without guarantee of the Government in the next year for the State bank of Vietnam before December 31^st.

3. While awaiting the Prime Minister’s approval for the limit on the foreign commercial loans, the Ministry of Finance and the State Bank, based on the actual foreign commercial loans granted, shall determine foreign commercial loans within the limit on foreign commercial loans in the year provided the accumulated net foreign commercial loans do not exceed 50% of the limit on foreign commercial loans of the previous year.

4. Where the economy needs to raise more capital and causes the limits on public debts and foreign debts to exceed the bracket decided by the National Assembly, the Ministry of Finance shall send reports to the Government and the Government shall request the National Assembly to decide.

Chapter IV

ORGANIZING THE SUPERVISION OF PUBLIC DEBTS AND NATIONAL FOREIGN DEBTS

Article 12. Supervised subjects

1. The agencies and units appointed to raise, use loans, and repay public debts.

2. The enterprises, credit institutions, and other organizations that take and repay non-guaranteed foreign loans as prescribed by law.

Article 13. Targets of the supervision of public debts and national foreign debts

1. Ensure the debt safety, maintain a reasonable debt portfolio within the safety limits on debts, ensure the long-term debt stability, national financial and monetary security.

2. Determine hidden risks to the debt portfolio and the weaknesses of the debt management in relation to the domestic and foreign economic environment.

3. Assist debt management agencies to suggest measures for making and adjusting the debt portfolio to the Government in order to optimize the solutions for raising capital, minimize risks and costs incurred by the State budget and the economy.

4. Form the basis for the determination of policies and plans, orient the raise and use of loans and public debt and national foreign debt management in each stage in accordance with socio-economic development policies of the State.

5. Assist loan users in monitoring their own investments, production, and business, identifying unusual cases to find solutions and develop.

6. Improve financial transparency and management of reserve obligations

7. Raise the efficiency of the financial analysis and forecasting, contribute to the improvement of management efficiency and establishment of macroeconomic policies in each stage.

Article 14. Rules for supervising public debts and national foreign debts

1. The criteria for public debts and national foreign debts shall be constantly and regularly supervised.

2. Ensure the compliance with the regulations, the responsiveness, specificity, and feasibility of proposals.

3. The costs of the supervision, analysis, and assessment of public debts and national foreign debts shall be covered by the State budget.

Article 15. Supervision contents

1. The supervision of the safety criteria, limits on public debts and national foreign debts shall comply with the regulations in Chapter 2 and Chapter 3 of this Circular.

2. Thematic (periodic, regular) supervisions of the capital mobilization, capital use, and debt repayment include:

a) Supervising and assessing the efficiency of loans given by the State budget to development projects of Ministries, central agencies, and local governments.

b) Supervising and assessing the efficiency of the use of loans and ability to repay the foreign loans taken by the Government for on-lending.

c) Supervising and assessing the efficiency of the use of loans and the ability to repay loans taken by enterprises and credit institutions guaranteed by the Government.

d) Supervising and assessing the mobilization and repayment of non-guaranteed loans taken by enterprises and organizations.

Article 16. Requirement of information provision and reports

1. The Ministry of Finance shall request supervised subjects to report the mobilization, use, repayment of loans and the management of public debts and national foreign debts, including:

a) Purposes and requirements;

b) Scope and contents

c) Outlines;

d) Deadline for submitting reports;

dd) Responsibilities and entitlements of supervised subjects;

e) Relevant contents.

2. The provision of information shall comply with the Decree No. 79/2010/ND-CP and the Circular No. 53/2011/TT-BTC dated April 27^th 2011 of the Ministry of Finance providing guidance on reports and disclosure of information about public debts and national foreign debts.

3. Based on the reports and information provided by supervised subjects, supervising authorities shall study, analyze, assess relevant information and documents, and make a draft report on the supervision result, specifying suggestions for the resolutions of arising issues, and request competent authorities to make decisions.

Chapter V

RESPONSIBILITIES OF AGENCIES FOR THE SUPERVISION OF PUBLIC DEBTS AND NATIONAL FOREIGN DEBTS

Article 17. Responsibilities of the Ministry of Finance

1. Carry out macroeconomic supervision of public debts, criteria for the safety of public debts and national foreign debts, and send reports to the Prime Minister every year before June 30^th of the next year.

2. Analyze and report the sustainability of public debts and national foreign debts, send reports to the Prime Minister and competent authorities.

3. Control the limits on public debts, limits on foreign commercial loans and foreign loan guarantee of the Government; cooperate with the State bank of Vietnam in establishing limits on annual national foreign commercial loans, and submit them to the Prime Minister for approval.

4. Cooperate with relevant agencies in carrying out periodic or unscheduled inspections of the mobilization and use of loans, and the repayment of public debts and national foreign debts.

Article 18. Responsibilities of the Ministry of Planning and Investment

1. Supervise and assess the efficiency of the use of ODA as prescribed by the Government.

2. Cooperate with the Ministry of Finance in public debt inspection and supervision; calculate debt safety criteria; supervise the mobilization and use of loans, and the repayment of public debts and national foreign debts.

Article 19. Responsibilities of the State bank of Vietnam

1. Supervising and assessing the non-guaranteed foreign loans taken by enterprises and credit institutions.

2. Establish, control, and ascertain the limits on non-guaranteed foreign loans taken by enterprises and credit institutions.

3. Cooperate with the Ministry of Finance in the inspection and supervision of national foreign debts, criteria for national foreign debt safety, the mobilization and use of loans, and the repayment of national foreign debts.

Article 20. Responsibilities of other Ministries, ministerial agencies, and other central agencies

1. Inspect, supervise, and assess the efficiency of the use of loans given by the State budget to the projects/programs of affiliated agencies and units; inspect and supervise the mobilization, use of loans, and repayment of debts owed by state-owned enterprises and corporations under the management of Ministries and central agencies.

2. Cooperate with and enable inspecting and supervising authorities during the inspection and supervision.

3. Make reports, provide information and documents sufficiently, and take responsibility for the provided information relating to the mobilization, use of loans and repayment of public debts and national foreign debts.

Article 21. Responsibilities of People’s Committees of central-affiliated cities and provinces

1. Carry out periodic or unscheduled inspections of the mobilization and use of loans, and the repayment and management of municipal debts.

2. Ensure the responsive provision of sufficient and accurate information for the Ministry of Finance and other inspecting and supervising authorities about debts, debt supervision criteria, mobilization and use of loans, and repayment of municipal debts.

Article 22. Responsibilities of on-lending organizations

1. The on-lending organizations authorized by the Ministry of Finance shall inspect, supervise, and assess the efficiency of the use and repayment of the loans for on-lending taken by the Government.

2. Make reports and provide information on the mobilization, use, and repayment of loans for on-lending.

3. Cooperate with the Ministry of Finance in inspecting and supervising the compliance with the regulations on the management, use, and repayment of loans of the authorized subjects.

Article 23. Responsibilities of economic organizations and credit institutions that owe and repay public debts and national foreign debts 

1. Enterprises and credit institutions that owe and repay public debts and national foreign debts shall comply with the Law on Public debt management, its guiding documents, and relevant documents on the loans and repayment of foreign debts; choose best loaners; efficiently use loans and fulfill all obligations arising from loan and guarantee agreements.

2. Facilitate the inspection, supervision, and enable debt management agencies to collect information and assess their debts.

Chapter VI

IMPLEMENTATION

Article 24. Effects

This Circular takes effect on August 01^st 2011.

Article 25. Implementation

1. Ministries, ministerial agencies, Governmental agencies, other central agencies, People’s Committees at all levels, involved organizations and individuals are responsible for the implementation of this Circular.

2. Ministries, ministerial agencies, Governmental agencies, other central agencies, People’s Committees at all levels, involved organizations and individuals are recommended to report any difficulty during the implementation to the Ministry of Finance for consideration and amendment./.