Quyết định 689/QD-TTg

DECISION

APPROVING THE MEDIUM-TERM DEBT MANAGEMENT PROGRAM PERIOD 2013-2015

THE PRIME MINISTER

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Law on public debt management dated June 17, 2009;

Pursuant to Resolution No. 10/2011/QH13 dated November 8, 2011 of the National Assembly on five year economic development Plan 2011-2015;

Pursuant to Decree No. 79/2010/ND-CP dated July 14, 2010 of the Government on public debt management operations;

Pursuant to Decision No. 958/QD-TTg dated July 27, 2012 of the Prime Minister approving the strategy of public debt and foreign debt of the country for the period 2011-2020 with a vision to 2030;

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

At the proposal of the Minister of Finance,

DECIDES:

Article 1. Approving the medium-term debt management program 2013-2015 with the following contents:

1. Name of program: Medium-term debt management program for the period 2013-2015

2. Program management agency: Ministry of Finance.

3. Coordinating agencies: Ministries, branches and localities

4. Objectives of program

a) General objectives:

The overall objectives of the program is to mobilize and manage the use of loan capital with appropriate cost and risk to meet the needs for balance of the state budget and investment in social economic development - in each period. The allocation and use of loan capital must be in the right purpose and effectively and ensure the solvency; maintain the indicators of public debt, government debt and foreign debt of the country at a safe level to ensure national financial security in accordance with the conditions of Vietnam and international practices.

b) Specific objectives for the period 2013-2015:

- Domestic and foreign loan to offset the state budget deficit by gradually reducing the state budget deficit, striving by 2015 (including government bonds) for less than 4.5% of GDP. Particularly 4.8% of GDP in 2013; about 4.7% of GDP in 2014.

- The issuer of domestic government bonds in the country for the investment program of transportation, irrigation, health and education projects for the period 2011-2015.

- Raising additional loan capital to perform the scheme of synchronous infrastructure structure construction to serve the industrialization and modernization of the country.

- Government guarantee, loan and repayment of foreign debts of enterprises, credit institutions in the form of unsecured loan. The loan and repayment must be within the limit of annual loan approved by competent authority.

- Strengthening risk management, implementing the public debt restructuring in order to reduce the risk of market, credit and liquidity, ensuring debt indicators within safety limit and national financial security.

- Minimizing refinancing risk, liquidity, exchange rate, currency, having mechanism to boost the development of government bond market and striving for extension of loan duration by issuing domestic government bonds for the period 2011-2015 from 4-6 years on average.

- Building, improving and developing the information systems for the monitoring and supervision and assessment of sustainability of public debt as prescribed.,

- Public debt (including government debt, guaranteed government debt and local government debt) by 2015 will not exceed 65% of GDP, in which the government outstanding debt must not exceed 50% of GDP and foreign debt of the country must not exceed 50% of GDP.

- The Government’s direct debt repayment obligations of the (excluding reloan) compared with the annual total state budget revenues not exceeding 25% and the annual foreign debt repayment obligation of the country is less than 25% of the export value of goods and services.

- Ensuring the target of rate of state foreign exchange reserve compared with the annual total short-term foreign outstanding debt of the country over 200%.

5. Management principle

a) The State uniformly and comprehensively manages public and foreign debt of the country, from the mobilization, allocation, use of loan capital to the repayment.

b) Ensuring debt safety within the limit approved by the competent authority and ensuring national financial security and macro economy balance.

c) Ensuring efficiency in the loan and use of loan capital without short-term loans for long-term investment. Foreign commercial loan is only used for programs and projects with possible direct capital recovery and solvency assurance.

d) The borrower is responsible to fulfill the obligation to repay the loan.

dd) Being public and transparent in the mobilization, allocation and use of loan and repayment. Programs and projects using loans from the Government and local authorities must be audited by the State Audit or independent audit.

e) All debt obligations are treated equally.

6. Management scope of debts

a) Government debt, including domestic debt (treasury bills, government bonds, raised from the funds, loan from existing funds of Treasury...); foreign debts (ODA, preferential and commercial loans) and other loans as prescribed by law.

b) Government guaranteed debt: loans from companies, credit institutions and other financial institutions (Vietnam Development Bank, Bank for Social Policies) from domestic and foreign capital sources as prescribed by law.

c) Local government debt: issuance of local government bond, loan from existing funds of Treasury, reloan from the Government’s foreign loan, loan from credit institutions and other institutions as prescribed by law.

d) The foreign debts in the form of unsecured loan which is managed through certification of annual limit of loan and repayment approved by the competent authority.

7. Essential tasks and solutions

a) Mobilizing additional loan capital for the balance of state budget and social-economic development:

- Balancing needs and effectively implementing the plan for mobilization and use of Government’s domestic and foreign loans for the period 2013-2015. Priority is given to long-term loans with low loan costs and reasonable risk, namely:

Unit: Billion dong

- Total loan rate annually reviewed and issued with guarantee by the government to ensure the safety target of public debt approved by National Assembly for the period 2013-2015 as follows:

Unit: Billion dong

- Continuing to control the limit of loan capital of the local government under the current regulation of law on the management of the state budget as follows:

Unit: Billion dong

- Foreign commercial loan limit foreign of the country; government-guaranteed foreign loan, unsecured loan of enterprises and credit institutions for the period 2013-2015 period with the details as follows:

Unit: Million USD

b) Fulfilling debt repayment obligations without occurrence of delinquency status to affect the Government’s international commitments.

Enterprises and organizations have responsibility and obligations to use loan capital for the right purposes, not using short-term loan to invest in the long and medium term projects, bearing all risk and taking responsibility before law in the process of mobilization and use of loan capital and punctual loan repayment.

c) Strengthening the risk management and implementation of a restructuring of number of public debts.

- Implementing Decision No.700/QD-TTg dated June 11, 2012 of the Prime Minister approving the scheme of international bond principal debt restructuring.

- Studying plan for dealing with exchange rate risk, floating interest rate swap of a number of debts in the current debt list.

- Organizing the loan classification of credit risk and issuing criteria for assessment and ranking of the solvency of the re-borrowers and ability of borrowers and the guarantees.

- Developing the controlling tools and risk warning system, maintaining and regularly inspecting the process of performance of public debt management.

- Strengthening the audit (state audit and independent audit) in accordance with the Law on Public Debt Management.

- Actively setting up and arrange the provision as prescribed by law in order to create the handling funds upon occurrence of risks.

d) Building, improving and developing the information systems for the monitoring, supervision and assessment of public debt sustainability.

- Continuing the investment in building systems of technical equipment necessary for the management, operation and use of information systems about public debt.

- Building a database of registered public sector loan; monitoring the reloan, underwriting, registration and processing of collateral, local government debt, risk warning system for public debt list.

- Building and deploying application software to update, operate and look up information about state management for public debt as prescribed.

- Investigating, assessing, scoping, gathering, processing, reporting and publicizing information about public debt, government debt and foreign debt of the country as prescribed.

dd) Continuing to improve the institutional framework of debt management policy.

- Studying, revising and issuing a new Decree to supersede Decree No. 123/2004/ND-CP dated May 18, 2004 of the Government stiulating a number of particular budget and financial mechanisms for Hanoi capital.

- Studying, amending and issuing a new Decree to supersede Decree No. 124/2004/ND-CP dated May 18, 2004 of the Government stiulating a number of particular budget and financial mechanisms for Ho Chi Minh city.

- Requesting the Government to issue a new Decree to supersede Decree No.134/2005/ND-CP on lenterprise’s loan and repayment of foreign debt by the method of unsecured loan and documents guiding the implementation of this Decree.

- Studying and requesting the competent authority to issue the sanctions and handling of violations against the investors who fail to fully and properly comply with the contents of government-guaranteed commitment.

- Studying and requesting the competent authority to issue the mechanism to manage collateral and mortgaged assets for the government-guaranteed programs and projects and the reloan of government’s foreign capital.

- Studying and issuing the guidance mechanisms of financial management for ODA programs and projects and other preferential loan capital.

- Studying, developing and requesting the Prime Minister to issue a list of sectors and areas given priority of reloan of preferential loan capital and foreign commercial loan of the government in each 5-year period.

e) Strictly controlling the supply and management of Government guarantee;

- The Government guarantee allocation must comply with the provisions of Decision No. 44/2011/QD-TTg dated August 18, 2011 of the Prime Minister on the list of programs and projects givien priority of may be considered for Government guarantee allocation.

- The issuance of international bonds is not considered immediately. The enterprises or commercial banks if having needs may proactively issue international bonds without the Government guarantee.

- Only considering the allocation of domestic loan guarantee for urgent projects, national key projects which have been decided on allocation of guarantee by the Prime Minister.

- Strengthening the inspection, monitoring, supervision and having specific treatment measures for Government-guaranteed programs and projects under difficulty in repayment of due debt, avoiding the pressure to obligations of provision debt of the state budget.

- Working closely with the managing agencies, local governments in the process of government guarantee for enterprises to ensure proper implementation of responsibility of each agency for investment projects guaranteed by the Government.

- Performing the registration collateral to secure the Government guarantee as well as the monitoring and supervision of this collateral.

g) Improving efficiency of on-lending loans.

- Enhancing risk-sharing mechanisms between the State and enterprises, investors, between the Government and local government for the Government’s foreign loans of on-lending loans.

- Expanding the reloan mechanism for local government to improve the autonomy and accountability of localities while ensuring fair treatment between localities.

- The use of reloan capital must be selective, avoid spread, focuse on works, programs and projects with high priority projects; continue focus on efficiency criteria when choosing each specific project.

- Strengthening the application of reloan method through the credit limit for the qualified commercial banks in cases where the sponsors making loan not by the the method of project financing to increase the responsibility of reloaning agencies as well as the re- borrowers.

- Urgently reviewing and improving regulations in the fields of registration of collateral of loan, treatment of collateral in the market mechanism paying attention to the characteristics of the Government’s foreign loans projects.

- The Ministries and localities need to strengthen the accountability in the appraisal and approval of investment projects, avoid spread investment; avoid local development planning randumly, coming to the application of the mechanism of the local government must ensure the solvency of the projects approved by the local government.

- The reloan project owners need to increase accountability and autonomy in the management of reloan capital sources, effectively using assets constituted from loan capital, closely observing the regulations on works insurance, management of project assets, collateral of loans and taking measures to minimize the risk and cost of the project.

- The project owners that are the Groups, large Corporations currently having their spreading investment status should urgently complete the financial restructuring, disinvesment from the business activities outside the major sectors, giving priority to the use of revenues from disinvestment for debt settlement.

- The reloaning agencies need to strengthening their appraisal, inspection and monitoring of projects authorized for reloan while developing tools of risk management and early risk detection for submission of report to the Government for timely settlement.

8. Funds for program implementation

a) Funds shall be allocated from the state budget and raised from foreign funding.

b) The Ministry of Finance shall assume the prime responsibility and coordinate with the units concerned to summarize, balance the annual state budget estimate to implement this program.

Article 2. Implementation organization

1. The Ministry of Finance is responsible for:

a) As the program managing agency, taking responsibility for assuming the prime responsibility and coordinating with the ministries and agencies concerned and People's Committees of provinces and centrally-affiliated cities to effectively implement this program.

b) Assuming the prime responsibility and coordinating with the Ministry of Planning and Investment, the State Bank of Vietnam to guide, urge and inspect the ministries and sectors concerned and People's Committees of provinces and centrally-affiliated cities to implement this Program, making annual update and report to the Prime Minister.

2. Ministry of Planning and Investment, the State Bank of Vietnam, based on their assigned tasks in the law on public debt management and the legal documents guiding the implementation, are responsible for implementing the related objectives and tasks of the Program.

3. The ministries, ministerial-level agencies, government-attached agencies shall, within their tasks and powers, perform their state management, examination, monitoring, inspection and providing information about public debt as prescribed.

4. People's Committees of provinces and centrally-affiliated cities are responsible for managing local government debt, fully and accurately and promptly providing information and data in accordance with provincial-level competence as prescribed.

Article 3. This Decision takes effect from its signing date.

Article 4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, Chairmen of People's Committees of provinces and centrally-affiliated cities are liable to executethis Decision. /.

ANNEX I

EXPECTED TARGETS OF PUBLIC DEBT FOR PERIOD 2013-2015
(Issued together with Decision No. 689/QD-TTg dated May 04, 2013 of the Prime Minister)

Unit: Thousand billion dong

ANNEX II

LIST OF SCHEMES FOR IMPLEMENTATION OF MEDIUM –TERM FOREIGN DEBT MANAGEMENT PROGRAM FOR THE PERIOD 2013-2015
(Issued together with Decision No. 689/QD-TTg dated May 04, 2013 of the Prime Minister)