Gov’t announces borrowing plans, limits for 2018

Prime Minister Nguyen Xuan Phuc has announced the Government’s plans on borrowing, repayment and borrowing limits for 2018.- Photo dantri.com.vn

Under Decision No. 437/QD-TTg issued last Saturday, the Government has approved plans to borrow VND384 trillion (US$16.91 billion) this year, of which VND275.97 trillion will come from domestic loans and the rest will be foreign loans.

The loans will be used for balancing the State budget (VND341.77 trillion), offsetting budget overspending (VND195 billion), repaying principal (VND146.77 trillion) and re-lending to enterprises (VND42.23 trillion).

The Government also plans to pay VND256.769 trillion worth of debts in 2018.

Under the decision, the Prime Minister also approved plans on borrowing limits guaranteed by the Government. The limits for domestic bond issuance of Vietnam Development Bank and Vietnam Bank for Social Policies are VNDD24.43 trillion and VND9.67 trillion, respectively.

The limit for domestic and foreign borrowing for firms’ projects guaranteed by the Government are set at VND2 trillion and $700 million maximum, respectively.

Under the decision, the Prime Minister has directed the Ministry of Finance to implement the plans.

Firms’ loans guaranteed by Gov’t

The Prime Minister last Friday also signed another decision to ease regulations on guarantee for new domestic and foreign loans taken by enterprises.

Under Decision No. 433/QD-TTg, the Government will only limit its guarantee for new domestic and foreign loans of enterprises to implement their investment projects, instead of stopping all guarantees for new loans as was done earlier.

The new regulation is aimed at amending and supplementing Decision No. 544/QD-TTg, dated April 20, 2017, on approving a medium-term debt management programme during the 2016-18 period. Under Decision No. 544/QD-TTg, the Government decided to temporarily stop all guarantees for new loans of enterprises.

The Prime Minister also asked the Ministry of Finance to review the list of projects guaranteed by the Government in the first half of 2018 and submit it to him for consideration and approval.

The medium-term debt management programme during the 2016-18 period is aimed to mobilise loans at appropriate costs and risks to meet the need of balancing the State budget and socio-economic development during certain periods. Besides this, the allocation and use of loan capital must be for the right purposes, ensuring debt repayment capability, maintaining the public debt index, Government debt and national foreign debt at a safe level as well as ensuring national financial security in line with Viet Nam’s context and international practice.

Under the programme, public debt (including Government debt, Government guaranteed debt and local Government debt) should not exceed 65 per cent of gross domestic product (GDP).