DECREE1

 ON ON-LENDING OF THE GOVERNMENT’S ODA LOANS AND FOREIGN CONCESSIONAL LOANS

Decree No. 97/2018/ND-CP dated June 30, 2018 of the Government of Vietnam on on-lending of the Government's ODA loans and foreign concessional loans, effective as of July 1, 2018, is amended by:

Decree No. 79/2021/ND-CP dated August 16, 2021 of the Government of Vietnam on amendments to Decree No. 97/2018/ND-CP, effective as of October 1, 2021.

Pursuant to the Law on Organizing the Government dated June 19, 2015;

Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Public Investment dated June 18, 2014;

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The Government of Vietnam hereby promulgates the Decree on on-lending of the government's ODA loans and foreign concessional loans.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Decree provides regulations on managing, on-lending and recovering loans borrowed from the government's ODA loans and foreign concessional loans.

Article 2. Regulated entities

1. The end borrower that borrows the Government’s ODA loans and foreign concessional loans as prescribed in the Law on Public Debt Management.

2. The Ministry of Finance of Vietnam and the representative agencies authorized by the Ministry of Finance of Vietnam for on-lending the loans.

3. The agencies, organizations and individuals related to the process of managing, on-lending and recovering loans derived from the Government’s ODA loans and foreign concessional loans.

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Aside from the terms defined in the Law on Public Debt Management, the terms of this Decree are construed as follows:

1. “Foreign loan agreement” means a capital-borrowing agreement, contract or deal concluded on behalf of the State or the Government with a foreign lender.

2. “On-lending agreement” means an on-lending contract or a loan sub-agreement signed between the Ministry of Finance or the duly-authorized intermediary and the end borrower regarding the on-lending.

3. “On-lending authorization contract" means a contract signed between the Ministry of Finance of Vietnam and the duly-authorized intermediary to on-lend loans, manage the on-lent loans and recover the debts, including the measure in term of the duly-authorized intermediary bears all the credit risks.

4. "Grace period" means a period of time when the end borrower already received the loan and has not paid back the principal but has paid enough interests and expenses as prescribed in the on-lending agreement.

Article 4. Setting a five-year on-lending limit

1. Set a five-year on-lending limit for the public sector entity and enterprise:

Before June 30 in the fifth year of the five-year-plan on borrowing loans and repaying public debts for these entities to register for the second five-year plan; the public sector entity and the enterprise (hereinafter referred to as “End borrower” shall submit to the Ministry of Finance the following documents:

a) An evaluation report on the on-lending and disbursement of the loans specified in the agreement and on the total anticipated disbursement within the current period of 5 years.

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c) A report on the opinions of the agency in charge about the application of the project managers requesting the disbursement for the enterprises and the public sector entities. 

2. Setting a five-year on-lending limit for the People’s Committees of the provinces.

Setting a five-year on-lending limit for the People’s Committee of the province is part of the plan on borrowing loans and repaying debts within 5 years of the local government. The process for setting an on-lending limit shall comply with the regulations in the Decree on local government’s debt management.

3. In consideration of indicators of public debt safety, total loan target and the local budget deficit specified in the five year financial plan on on-lent loans granted to the People’s Committees of the provinces, the Ministry of Finance of Vietnam shall make a general report on the requests of the central or local departments and agencies, set a five-year on-lending limit, and send this general report and limit to the Government of Vietnam for the Government to forward them to the Standing Committee of the National Assembly of Vietnam and the National Assembly of Vietnam.

Article 5. Developing an on-lending plan and an annual on-lending limit

1. Develop an on-lending plan and set an annual on-lending limit for the public service provider and enterprise:

Before July 20 every year to develop an on-lending plan and set an annual on-lending limit; the end borrower shall send the following documents to the Ministry of Finance of Vietnam:

a) An evaluation report on the on-lending process, disbursement value, repayment of annual on-lent loans and accumulation data from the time receiving the loans to the year before the plan year; unrealized value, details of each project and each year.  

b) An anticipated report on the value will be used in the plan year and other on-lent loans specified in the signed agreement, and on-lent loans in the new agreement to be signed.

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a) The development of the annual on-lending plan for the People’s Committee of the province is part of the annual plan on borrowing loans and repaying debts of the local government. The process of developing the plan shall comply with the regulations in the Decree on local Government’s debt management;

b) The contents of the annual on-lending plan for the People's Committee of the province shall include the loans, repayments for on-lent loans and the solvency of the local government.

3. Based on the five-year on-lending limit, the application of the end borrowers and project managers, and the indicators of public debt safety, the Ministry of Finance of Vietnam shall make a specific consolidated report on the annual on-lending plan and submit it to the Government for getting an approval for the total annual on-lending limit, then forward this report to the Prime Minister of Vietnam for consideration and approval for the plan of the Government of Vietnam on borrowing loans and repaying debts.

4. If the disbursement exceeds the annual on-lending plan, the Ministry of Finance of Vietnam shall make a consolidated report on this case and submit this report to the Government of Vietnam for making adjustments to the plan in order to ensure national principles.

a) If the Government of Vietnam on-lends the loans to public sector entities and enterprises, the project implementation schedule shall be followed. 

b) If the Government of Vietnam on-lends the loans to the People’s Committee of the province, the disbursement shall not exceed the annual loans which are approved by the National Assembly of Vietnam.

Article 6. On-lending currency and debt recovery currency

1. On-lending currency is the currency in which the external loan is borrowed by the Government of Vietnam.

2. Debt recovery currency is the currency in which the on-lent capital is denominated. If the end borrower repays the debt in Vietnam Dong, the intermediary shall apply the selling rate of this currency set by the Joint stock Commercial Bank for Foreign Trade of Vietnam at the time making the repayment in order to recover the debt.

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1. If the end borrower is the People's Committee of the province, the repayment period and the grace period shall comply with the regulations in the foreign loan agreement.

2. If the end borrower is the public service provider or enterprise:

a) The repayment period shall be equal to the capital recovery period under the investment project (feasibility study report) which is approved by the competent authority, but shall not exceed the grace period specified in the foreign loan agreement.

b) The grace period shall be equal to the construction period, which will last until the project is put into operation as mentioned in the investment project (feasibility study report) approved by the competent authority, but shall not exceed the grace period specified in the foreign loan agreement.

c) The repayment period and the grace period of on-lent loans shall start from the beginning of repayment period and grace period of foreign loans.

3. If there is any difference in the repayment period and the grace period between the foreign loans and the on-lent loans, the recovery of on-lent loans which are not paid to the foreign lender shall be included in the Accumulation Fund for Debt Payment.

Article 8. On-lending interest rate

The on-lending interest rate is specified in Clause 5, Article 34 of the Law on Public Debt Management including the interest rate of loans borrowed from a foreign country of the Government of Vietnam, the charges specified in the foreign loan agreement, and the management charge of on-lent loans and loan-loss provision.

Article 9. The charges and relevant costs collected by foreign lender and the charges for domestic and foreign banks.

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2. The end borrower shall pay the charges and costs to the foreign lender through the duly-authorized intermediary, and this intermediary in turn shall pay them to the Ministry of Finance of Vietnam. The end borrower shall pay the service charges directly to the banks which provide service to it.

Article 10. Management fees of on-lent loans.

1. The rate of management fees of on-lent loans shall be 0.25% per year, to be calculated based on the loan balance as follows:

a) The People’s Committee of the province or city shall transfer the amount of money to the intermediary (Ministry of Finance of Vietnam) which is equal to 0,25% per year.

b) The enterprise and public sector entity shall pay for the duly-authorized intermediary an amount of 0,25% per year. The duly-authorized intermediary shall be entitled to 0,15% per year and shall transfer the payment of 0,1% per year to the Ministry of Finance of Vietnam.

2. The management and use of the on-lending charge shall comply with the financial mechanism of the duly-authorized intermediary. The management and use of on-lending charges of the Ministry of Finance shall be carried out in accordance with the regulations of the Prime Minister of Vietnam.

Article 11. Loan loss provision

1. The loan loss provision shall be carried out as follows:

a) The loan loss provision applied to the People's Committee of the province shall be equal to 0% per year per loan balance.

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c) The loan loss provision applied to the enterprises shall be equal to 1,5% per year per loan balance.

2. Deductions for loan loss provision:

a) If the duly-authorized intermediary does not bear credit risks, the loan loss provision shall be paid to the Accumulation Fund for Debt Payment.

b) If the duly-authorized intermediary bears all the credit risks, the loan loss provision shall be submitted to this intermediary. The duly-authorized intermediary shall classify debts, deduct and use the loan loss provision to handle credit risks according to the law on credits and other relevant legal documents.

Article 12. Late payment interest

1. If the end borrower does not repay the principal, interests and other relevant costs on time as prescribed by laws (if any), it shall pay for the late payment interest as prescribed in the regulations in Clause 2, Clause 3 of this Article.

2. If the late payment includes the principal, interests and costs specified in the foreign loan agreement, the late payment interest rate shall be determined in accordance with the regulations in the aforesaid agreement. If the foreign loan agreement does not specify the late payment interest rate, this rate shall be equal to 150% of the rate which the Government repays to the foreign lender.

3. As for the management fees of on-lent loans and loan loss provision, the late payment interest rate shall be equal to 150% of the management fees and loan loss provision specified in Articles 10 and 11 hereof.

4. The number of days beyond limit shall be counted from expiration date of repayment period to the date before the date on which the repayment is received. 

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The number of days within a year counted to determine the interests, late payment interest, charges paid to foreign lender, management fees of on-lent loans and loan loss provision shall comply with the regulations specified in the foreign loan agreement.

Article 14. Debt acknowledgement

The end borrower shall acknowledge the debts at the time the Government of Vietnam acknowledges the debts to the foreign lender.

Article 15. Order of priority for recovering loans

1. The end borrower shall repay the principal, interest and charges specified in the on-lending agreement before repaying its other debts.

2. If the end borrower can only pay one part of its debt on the due date, the order of priority for recovering loans shall be set as follows: management fees of on-lent loans, loan loss provision, late payment interest, overdue debt interest, due debt interest, other charges, overdue principal and due principal.

Article 16. Loan security

1. The end borrower shall use the asset-based lending method prescribed by law, except cases exempted from collateral as prescribed in Clause 4 of this Article. The loan security shall be specified in the on-lending agreement.

2. The collateral shall include assets originating from the Government’s on-lent loans and/or other legal assets of the end borrower. The collaterals shall be approved by the Ministry of Finance of Vietnam if the Government of Vietnam bears the credit risks or approved by the duly-authorized intermediary if this intermediary bears the credit risks.

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4.4 No collateral is required in any of the following cases:

a) An on-lent loan granted to the People’s Committee of province;

b) An on-lent loans acknowledged by a project management board affiliated to Ministry and then transferred to the People’s Committee of province.

5. The duly-authorized intermediary and the end borrower shall complete the procedures for providing collateral as prescribed by the Law on secured transactions and collateral management.

6. The handling of collaterals for debt recovery shall be carried out in accordance with laws. If the duly-authorized intermediary does not bear the credit risks, the handling of guarantees for debt recovery shall be approved by the Prime Minister of Vietnam.

Article 17. Repayment on on-lent loans

1. The end borrower shall allocate budget from the financial plan or budget estimates of the end borrower in order to make full repayment on time as prescribed in the on-lending agreement. The repayment shall not depend on the progress of implementing the commercial contracts on on-lent loans.

2. The end borrower shall make a repayment on on-lent loans before repaying other debts.

3.5 (annulled)

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5. Within 2 working days from the date on which the repayment from the end borrower is received, the intermediary or the duly-authorized intermediary  shall transfer the total repayment (principal, interest, charges, etc. ) to the Accumulation Fund for Debt Payment after deducting the management fees of on-lent loans as prescribed in Clause 1, Article 10, hereof. As for the banks that have policy on authorization for on-lending multiple loans, the period making repayment to the Ministry of Finance of Vietnam shall be carried out monthly as prescribed in the Government's Decree on managing Accumulation Fund for Debt Payment.

Article 18. Pre-maturity payment

1. The end borrower may pay debt before maturity if it satisfies the requirements for pre-maturity payment as prescribed in the foreign loan agreement and if it is approved by the Ministry of Finance of Vietnam.

2. If there is no regulation on pre-maturity payment in the foreign loan agreement, the end borrower shall only make a pre-maturity payment when it is approved by the Prime Minister of Vietnam (if the duly-authorized intermediary does not bear the credit risks) or by the duly-authorized intermediary (if this agency bears the credit risks).

3. The end borrower shall send a request document to the Ministry of Finance of Vietnam and the duly-authorized intermediary within 90 days before the repayment due date in order to make a pre-maturity payment; the Ministry of Finance of Vietnam or the duly-authorized intermediary shall communicate with the foreign lender and report about this request to the competent authority for consideration and decision-making.

4. The end borrower shall pay all the charges and costs when making a pre-maturity payment.

Article 19. Handing over debt obligation

1. The end borrower shall only hand over and transfer the debt obligation incurred from on-lent loans if it is:

a) Approved by the Prime Minister of Vietnam when the duly-authorized intermediary does not bear the credit risks; or

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2. When the end borrower is requested to hand over or transfer the debt obligation, it shall report and provide explanation about this request to the Ministry of Finance of Vietnam or the duly-authorized intermediary  and take charge to implement the approval document from the competent authority mentioned in Clause 1 of this Article.

Chapter II

ON-LENDING ODA LOANS AND FOREIGN CONCESSIONAL LOANS

Article 20. Eligibility conditions for receiving on-lent capital

The eligibility conditions for the People's Committees of the provinces, enterprises or public sector entities to borrow on-lent capital shall be approved in accordance with Article 36 of the Law on Public Debt Management.

Article 21. On-lent rate

1.6 The on-lending rate for the People’s Committee of the province:

a) The local government having the rate of additional funding from the central government budget to total local government budget expenditure equaling 70% or more shall be entitled to 10% of the on-lent capital derived from the ODA loan or concessional loan;

b) The local government having the rate of additional funding from the central government budget to total local government budget expenditure from 50% to less than 70% shall be entitled to 30% of the on-lent capital derived from the ODA loan or concessional loan;

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d) The local government having the rate of revenues regulated into central budget shall be entitled to 70% of the on-lent capital derived from the ODA loan or concessional loan;

dd) Hanoi city and Ho Chi Minh city: shall be entitled to 100% of the on-lent capital deprived from the ODA loan or concessional loan;

e) With regard to programs and projects in conjunction with sustainable development adapted to climate change in certain local areas in Mekong Delta that need the support from the Government of Vietnam as prescribed in the Resolution No. 41/NQ-CP dated April 1, 2021, the on-lending rate shall be decided by the Government but not less than 10%.

2. The on-lending rate for public service providers:

a) The public service provider which covers full recurrent expenditures and investment expenditures by its own budget shall be entitled to 100% of the on-lent capital derived from the ODA loan and concessional loan used for investment project.

b) The public service provider which covers full recurrent expenditures and partial investment funding by its own budget shall be entitled to 50% of the on-lent capital derived from the ODA loan and concessional loan used for investment project.

c)7 If other on-lending rates apply to the entities prescribed in Point a, Point b Clause 2 of this Article, in the course of developing financial mechanism for ODA loans and concessional loans, upon the proposal of the agency in charge and end borrower, the Ministry of Finance of Vietnam shall take charge and cooperate with the Ministry of Planning and Investment of Vietnam and relevant agencies in seeking decision from the Government of Vietnam on the on-lending rates on a case-by-case basis but not less than 10%.

3. The on-lending rate for enterprises:

Enterprises are eligible for receiving all of the on-lent capital derived from the ODA loan and concessional loan which are used for investment project, but this amount shall not exceed 70% of the total investment capital approved by the competent authority.

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a) The on-lending rate prescribed in Clauses 1, 2, 3 of this Article shall apply to the principal repayment prescribed in the foreign loan agreement;

b) The end borrower shall allocate from its budget to complete the repayment obligations including commitment fees, late payment interest, pre-maturity repayment fee and other charges incurred from the whole amount of ODA loan or concessional loan of the Government of Vietnam which are used for project investment.

Article 22. Identification of the intermediary

1. If the Ministry of Finance of Vietnam on-lends directly the loans to the People's Committee of the province, the Ministry of Finance of Vietnam is the intermediary.

2. Defining the duly-authorized intermediary which does not bear the credit risks:

If the duly-authorized intermediary on-lends loans to a public service provider or enterprise for carrying out the investment project of the State’s investment plan, the Ministry of Finance of Vietnam shall make a report based on the characteristics of this project and send it to the Prime Minister of Vietnam for identification of this intermediary, which is:

a) The Vietnam Development Bank, as for the investment program or project; or

b) The Vietnam Bank for Social Policies, as for the social agenda or project.

3. The duly-authorized intermediary which bears the credit risks:

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b) When suggesting the project, the agency in charge shall request the credit institution to become the duly-authorized intermediary and bear the credit risks if this institution agrees.

c) The credit institution has the authority and responsibility to give opinions to the agency in charge of the project or to the project manager during the development process or the process of approving the pre-feasibility report or feasibility report.

d) During the process of appraising the pre-feasibility report or feasibility report, if the credit institution determines that the project is ineffective and refuses to participate in this project, the agency in charge shall select another credit institution which satisfies the conditions for becoming the duly-authorized intermediary to bear the credit risks.

Article 23. Responsibilities and authority of the duly-authorized intermediary

1. The duly-authorized intermediary shall implement the regulations prescribed in Clause 1, Article 40 of the Law on Public Debt Management.

2. Aside from the regulations prescribed in Clause 1 of this Article, the duly-authorized intermediary bearing the credit risks shall:

a) Bear all the credit risks and take the responsibility to repay all debts to the Ministry of Finance of Vietnam on time and in all cases prescribed in the on-lending authorization contract.

b) Be entitled to receive the management fees of on-lent loans prescribed in the regulations in Article 10 hereof, and the whole loan loss provision.

c) Make decisions on the collateral given by the end borrower.

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3.8Notwithstanding Clause 1 of this Article, the duly-authorized intermediary not bearing the credit risks shall have the following responsibilities:

a) Assess the sub-loans granted to enterprises, public service providers and send the assessment reports to the Ministry of Finance of Vietnam; the reports shall affirm the capital recovery of the projects; capacity to repay the sub-loans of the enterprises, public service providers;

b) Manage the on-lending process and collection of sub-loans, ensure all the loans are repaid in full and when they come due to the Ministry of Finance of Vietnam according to the assessment reports and on-lending authorization contracts.

c) Assess the loan security plan; register, manage and realize the collateral and other assets pledged by the end borrower as the security for the sub-loan as prescribed in the law on collateral;

d) Inspect the use of sub-loans by the end borrower through examining the sub-loan disbursement documents, except for those controlled by the State Treasury;

dd) Supervise the sub-loan, financial position of the end borrower, the existing operation of the project invested by the sub-loan; carry out periodic or ad-hoc inspection of the sub-loan, the end borrower and send a report to the Ministry of Finance of Vietnam;

e) Assess the sub-loan settlement plan (if any) of the end borrower and the report on the assessment of sub-loan settlement plan, clearly state the appropriateness or non-appropriateness of the sub-loan settlement plan and send it to the Ministry of Finance of Vietnam for seeking a decision from the competent authority.

Article 24. On-lending appraisal agency

1. The Ministry of Finance of Vietnam is the agency which appraises the eligibility conditions for receiving on-lent loans of the People's Committees of provinces.

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Article 25. Matters to be appraised

1. The on-lending appraisal of the People’s Committee of the province shall be carried out in accordance with Clause 1, Article 38 of the Law on Public Debt Management; this appraisal is carried out to evaluate the ability to satisfy the eligibility conditions for on-lent loans as prescribed in Clause 1, Article 36 of the Law on Public Debt Management.

2. The on-lending appraisal of public sector entities or enterprises shall be carried out in accordance with Clause 2, Article 38 of the Law on Public Debt; this appraisal is carried out to evaluate:

a) The legal identity and the ability to satisfy the eligibility conditions for on-lent loans as prescribed in Article 36 of the Law on Public Debt Management.

b) The financial capacity and the debt situation of the end borrower.

c) The feasibility of the plan on using capital loan and repaying debts, and the plan on giving the collaterals.

d) The risks and the feasibility of the measures which are adopted to prevent and manage risks and are specified in the repayment plan of the end borrower.

Article 26. On-lending appraisal process

1. After the investment project (feasibility study report) gets approved by the competent authority, the authorized representative of the end borrower shall send an official dispatch to request for the on-lending appraisal, enclosed with the appraisal documents specified in Article 27 hereof to the appraisal agency and the Ministry of Finance of Vietnam. The person who makes the decision to invest in the project which receives on-lent loans derived from the ODA loan or concessional loan shall ensure that the repayment for the capital loan has high feasibility and legal basis.

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3. If the Ministry of Finance of Vietnam authorizes the duly-authorized intermediary, within 30 working days from the date on which the completed documents are received, the appraisal agency shall send the appraisal report to the Ministry of Finance of Vietnam. Within 15 working days from the date on which the completed documents are received, the Ministry of Finance of Vietnam shall report the appraisal result to the Ministry of Finance of Vietnam based on the appraisal report of the duly-authorized intermediary.

4. If the eligibility conditions for on-lent loans are satisfied by the end borrower, the Ministry of Finance of Vietnam shall report this result to the Ministry of Finance for approval for the on-lending; if the conditions are not satisfied, the Ministry of Finance shall report this result to the Prime Minister of Vietnam for him to refuse to sign the foreign loan agreement.

5. According to the on-lending approval decision of the Prime Minister of Vietnam, the Ministry of Finance of Vietnam shall negotiate and sign the loan agreement in accordance with the current regulations of the law on managing ODA loan capital and foreign concessional loan.

6. The appraisal agency shall take full responsibility for the on-lending appraisal result. The end borrower shall take full responsibility for the references and data specified in the application documents.

Article 27. Application for appraisal

1. The application documents for appraisal of the solvency of the local budget shall consist of: 

a) A written consent of the Provincial People's Council or the Standing committee of People's Council to the mobilization of capital for investment or contribution of investment capital in a public-private partnership project under the Government's plan to on-lend of the Government’s foreign capital and sources of funding for repaying debt.

b) A document proposing the approval for the policy of investment; Investment Decision, investment project document (or feasibility study report) which are approved by the competent authority and include the plan on using on-lent capital.

c) A report on the status of lending and repayment of the locality at the time of the loan proposal, including details of all occurred loans and outstanding loans; report on the loan balance of the local budget last year and estimate the current loan balance of the current year; the percentage of debt repayment on the local budget revenue is allocated according to decentralization in the last three years.

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dd) Other relevant documents supporting the province’s solvency (if any).

2. The application documents of the enterprises and public sector entities shall consist of:

a) A document proposing the approval for the policy of investment;

b) Investment project (feasibility study report) approved by the competent authority and enclosed with the Approval Decision for the investment project.

c) The plan on using capital loan and paying debt; The plan on owner’s equity (for enterprises), counterpart funds;  the plan on giving collaterals and relevant documents of this plan; the management plan and the plan on handling collaterals; a document providing explanation about the revenues – expenditures of the project which is approved by the investor.

d) An annual audited financial statement of the last 03 years to the date on which the appraisal application and the report on the status of lending, repayment and outstanding loans of the end borrower.

Article 28. Signing the on-lending agreement, on-lending authorization contract

1. After the foreign loan agreement is signed, within 30 working days, the Ministry of Finance of Vietnam shall rely on the decision on approving the on-lent capital borrowed from the ODA funds or concessional loans to sign:

a) The on-lending agreement with the People’s Committee of the province, using the form in Appendix I enclosed hereof; or

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c) The on-lending authorization contract with the duly-authorized intermediary which bears the credit risks, using the form in Appendix III enclosed hereof.

2. Within 30 working days from the date on which the on-lending authorization contract is signed, the duly-authorized intermediary shall sign an on-lending agreement with the end borrower in order to manage the process of on-lending and recovering debts.

Chapter III

MANAGEMENT OF ON-LENT LOANS

Article 29. Management of the use of on-lent capital

1. The end borrower shall take full responsibility to use the capital loan effectively and with right purposes according to the approval decision on policy of investment, the investment decision of the competent authority, the approved project document, the signed on-lending agreement.

2. The duly-authorized intermediary shall take full responsibility to examine the use of on-lent loans by the end borrower by evaluating the document on disbursements for on-lent loans, except the cases where the disbursements are controlled by the State Treasury. The end borrower shall take full responsibility for providing valid and authentic documents for the duly-authorized intermediary. In case of need, the duly-authorized intermediary shall have the authority to request the end borrower to report to it about the use of capital loan and to prove that this loan is used with right purposes.

3. According to the disbursement announcement of the foreign lender and the announcement of the Ministry of Finance of Vietnam, the intermediary and the duly-authorized intermediary shall record a debit and submit a periodic report on debt data to compare with the end borrower’s report.

4. The end borrower shall take charge to implement the measures for managing on-lent loans, purchase trade credit insurance and exchange rate risk insurance as prescribed by laws in order to reduce the credit risks and the exchange rate risks.

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1. The end borrower shall pay off debts in full to the Ministry of Finance of Vietnam on time according to the on-lending agreement (if this Ministry on-lends loans to the People’s Committee of province) or to the duly-authorized intermediary in order for these agencies to pay off the debt recovery in full and on time to the Accumulation Fund for Debt Payment.

2. If the duly-authorized intermediary bears the credit risks, this agency shall urge and collect debts in order to make full repayment to the Ministry of Finance of Vietnam on time and in accordance with the authorized on-lending contract. 

3. Quarterly, the duly-authorized intermediary shall compare the debt data including the withdrawal amount, repayment amount and outstanding loans with the end borrower’s data.

4. No later than 60 days from the last day of the previous year, the duly-authorized intermediary shall make an annual report on the debt situations of all the on-lent loans managed by it, compare this report with the report from the Ministry of Finance of Vietnam including the total number of on-lending projects, disbursements, repayments and outstanding loans on the case-by-case basis.

Article 31. Management of collaterals

1.9 Within 30 days from the date on which the on-lending agreement is signed with the public sector entity or enterprise, the end borrower and the duly-authorized intermediary shall send a copy of the loan security contract to the Ministry of Finance of Vietnam.

2. Within 30 days from the date on which the loan security contract is signed, according to the law on secured transactions, the end borrower shall apply for the loan security to guarantee for the on-lent loans.

3. The parties related to the collateral shall be responsible to comply with the regulations on collaterals. The collateral shall be managed and used with right purposes. The handing over and transferring of collateral shall be approved by the Prime Minister of Vietnam if the duly-authorized intermediary does not bear the credit risks, or by the duly-authorized intermediary if this agency bears the credit risks.

4. The loan security contract shall end only if the end borrower completes all the debt obligations in accordance with the on-lending agreement.

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6. The duly-authorized intermediary shall manage and supervise the process of using the collateral; shall have the authority to hire an independent organization to appraise, evaluate, and supervise the collateral if being required to take compulsory measures as prescribed by laws and shall handle the collateral. The end borrower shall be responsible for paying all these charges.

Article 32. Reporting the status of on-lending and financial situation of the end borrower

1. 10The end borrower which is the People’s Committee of the province shall send reports on on-lending situation to the Ministry of Finance of Vietnam, the end borrower which is a public sector entity or an enterprise shall send reports to the duly-authorized intermediary twice a year, the first report shall be sent no later than July 31 of the year for the reporting period from January 1 to June 30, and then second report shall be sent no later than February 15 of the following year for the reporting period from July 1 to December 31, including:

a) Loan drawdown, repayment, outstanding amount of the sub-loan;

b) Fluctuations to the collateral;

c) Financial positions, debts of the end borrower, including debt balance, past due loans (if any) to any creditor;

d) Existing operation of the projects, management and use of assets of the projects and assets formed by borrowed capital.

2.11The duly-authorized intermediary shall send reports with the contents specified in clause 1 of this Article to the Ministry of Finance of Vietnam twice a year, the first report shall be sent no later than August 31 of the year for the reporting period from January 1 to June 30 and the second report shall not sent no later than February 28 of the following year for the reporting period from July 1 to December 31 of the reporting year or report to it immediately if any problem occurs and affects the solvency of each on-lending project or end borrower.

3. Every year, the Ministry of Finance of Vietnam shall mention about the status of on-lending in the general report on public debt management.

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Article 33. Evaluation and supervision

1. The on-lending which complies with the regulations hereof shall be evaluated by the competent regulatory agencies as prescribed by laws.

2. The duly-authorized intermediary shall manage and supervise the on-lent loans, end borrower, the on-lending process, debt recovery process, fluctuations of the collaterals, development process, construction work process which is invested by using periodic on-lent loans, and shall carry out inspection for the end borrower and report this result to the Ministry of Finance of Vietnam.

3. The Ministry of Finance of Vietnam shall supervise the on-lending through the duly-authorized intermediary. According to the annual or sudden inspection plan, the Ministry of Finance of Vietnam shall carry out inspection for the duly-authorized intermediary and the end borrower.

4. During the inspection and supervision processes, if the end borrower does not comply with the commitment or obligations mentioned in the on-lending agreement, the duly-authorized intermediary or the Ministry of Finance of Vietnam shall handle this case in accordance with its authority. If the case is beyond its competence, the Ministry of Finance of Vietnam shall report this problem to the Prime Minister of Vietnam for him to decide the handling measures. 

Chapter IV

DEBT CLASSIFICATION, RISK MANAGEMENT AND HANDLING OF ON-LENT LOANS

 Article 34. Debt classification

1. The on-lent loans given to the public sector entities or enterprises shall be classified periodically by the duly-authorized intermediary and shall also be included in the debt classification table of the public debt management program, which is created based on the end borrower’s status of fulfilling debt obligations.

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b) Group 2: The debt is overdue for 1 period;

c) Group 3: The debt is overdue for 2 or 3 periods;

d) Group 4: The debt is overdue for 4 periods or above;

dd) Group 5: The debt cannot be repaid. 

2. The duly-authorized intermediary shall annually report about the debt classification process managed by it to the Ministry of Finance of Vietnam for this Ministry to make a final report on the debt classification of on-lent loan portfolio.

3. The debt classification is not applicable to on-lent loans given to the People’s Committees of provinces.

4. The debt classification applied to on-lent loans when the intermediary bears the credit risks shall be carried out in accordance with the regulations of the State bank of Vietnam on classifying the assets, loan loss provision amounts and methods and the use of loan loss provision for handling risks during the operation process of the credit institution.

Article 35. Risk management

1. The Ministry of Finance of Vietnam shall apply the professional risk management based on the debt classification as follows:

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b)12 If two or three loan installments are missed: Where the end borrower is an enterprise granted the sub-loan by the duly-authorized intermediary in which the intermediary bears the credit risks, at least 15 days before the subsequent loan installment, it shall at least maintain account balance as follows:

- Three subsequent loan installments if two loan installments are missed;

- Three subsequent loan installments if three loan installments are missed.

c) As for the debt which is overdue for 3 periods or above: The intermediary shall be authorized by the end borrower to request the borrower’s banks to deduct money from its account for repaying debts as prescribed in Clause 5, Article 17 hereof.

d) If the borrower cannot repay the debt: It shall implement the handling measures which are approved by the Prime Minister of Vietnam including handling collateral to recover debt.

2. The risk handling shall comply with the laws in reducing maximum risk for the State; the intermediary and the end borrower shall take responsibility for revoking and handling debts.

Article 36. Extending repayment period

1. If the end borrower has temporary difficulty in keeping up with the rate of the project's process, earning enough revenues to repay debts, and making repayment on time although it already applied remedial measures due to objective factors, natural disasters, enemy-inflicted devastation, changing of policy, economic background which causes a negative effect to the project.

a) The Minister of Finance of Vietnam shall consider and extend the repayment period and grace period of the on-lent loans, but these periods shall not exceed the repayment period of the foreign loans. 

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2. At the request of the end borrower and the agency in charge of the end borrower, and according to the appraisal report on the solvency of the end borrower which is made based on the plan on extending repayment period and grace period of the duly-authorized intermediary, the consideration and decision for approving the extended period, repayment period and grace period shall be made.

3. In order to appraise the solvency based on the plan on extending repayment period and grace period, the end borrower shall submit the following documents to the duly-authorized intermediary:

a) The plan on extending repayment period.

b) An audited financial report of the last 3 years of the end borrower.

c) A report on the opinions of the agency in charge and the related agency on the reasons for having financial difficulties in repaying debt.

4. The credit institution shall consider extending the repayment period for the on-lent loans which are given when the intermediary bears the credit risks. In this case, the credit institution shall take full responsibility in repaying the capital loan to the Ministry of Finance of Vietnam in accordance with the on-lending authorization contract. 

Article 37. Charging off debt

1. The on-lent loans given to a public sector entity or enterprise shall be charged off when the end borrower has difficulty for a long time in making repayment due to objective factors, natural disasters, enemy-inflicted devastation, changing in policy, economic background that causes a negative effect to the project leading to a financial loss in 3 consecutive years or more until the deadline date of the repayment making it difficult to repay other lenders, difficulty in ensuring working capital to complete the obligations to the employees although the public sector entity or enterprise already applied remedial measures, however, it still cannot repay debts, when the end borrower has a scheme for finance restructuring which is approved by the competent authority based on the policy of investment.

2. The charge-off period shall not exceed 5 years.

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4. For the duly-authorized intermediary to appraise the solvency of the end borrower based on the charge-off plan, the aforesaid borrower shall submit:

a) A plan on making repayment after the period of charging off debt and/or budget expires.

b) An annual audited financial report of the last 3 years of the end borrower.

c) A report on the opinions of the agency in charge and the related agency on the reasons why the project has difficulties and has debts occurred and cannot make repayment.

d) A scheme for finance restructuring of the end borrower which is approved by the competent authority based on the policy of investment.

5. The Ministry of Finance of Vietnam shall forward the report on appraising the charge-off plan and the request from the duly-authorized intermediary to the Ministry of Finance of Vietnam for him to consider and make decision to charge off the on-lent loans.

6. If the on-lent loans are charged off by a credit institution which bears the credit risks, this institution shall repay the capital loan to the Ministry of Finance of Vietnam according to the on-lending authorization contract.

Article 38. Partial debt write-off

1. The partial debt write-off for interest, late payment interest and a partial on-lent capital shall be considered when the end borrower is a public sector entity or enterprise that has difficulty for a long time in making repayment due to objective factors, natural disasters, enemy-inflicted devastation, changing in policy, economic background that causes a negative effect to the project leading to a financial loss in 5 consecutive years or more until the deadline date of repayment making it difficult to repay other lenders, difficulty in ensuring working capital to complete the obligations to the employees although the public sector entity or enterprise already applied remedial measures, however, it still cannot repay debts, when at least one lender agrees to the principle on restructuring the debt; when the end borrower has a scheme for finance restructuring which is approved by the competent authority based on the policy of investment.

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a) A plan on making repayment after the period of charging off debt and/or budget expires.

b) An annual audited financial report of the last 5 years of the end borrower.

c) A report on the opinions of the agency in charge and the related agency on the reasons why the project has difficulties and has debts occurred and cannot make repayment.

d) A report on the opinions of at least one lender who agrees to the principle on restructuring another relevant debt for the end borrower.

dd) A scheme on finance restructuring of the end borrower which is approved by the competent authority based on the policy of investment, applicable to the project using on-lent capital.

3. The Ministry of Finance of Vietnam shall forward the report on appraising the plan on writing off partial debt and the request from the duly-authorized intermediary to the Prime Minister of Vietnam for him to consider and make decision to write off partial debt of the on-lent loan.

4. The debt write off for the on-lent loan carried out in accordance with the measure in which the intermediary bears the credit risks shall be decided by the credit institution. In this case, the credit institution shall take full responsibility in repaying the capital loan to the Ministry of Finance of Vietnam in accordance with the on-lending authorization contract.

Article 39. Writing off full debts if the end borrower is an enterprise

1. If the end borrower is an enterprise that has been dissolved or has declared bankruptcy in accordance with the competent authority's decision, the debt recovery shall be carried out in accordance with the law on dissolution and bankruptcy.

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Article 40. Budget for settling debts

1. The end borrower shall repay debt to the Ministry of Finance of Vietnam by sending money to the Accumulation Fund for Debt Payment, and use this fund as a source to repay foreign debt. The Ministry of Finance of Vietnam shall repay debt in accordance with the regulations in the foreign loan agreement.

2. If the Ministry of Finance of Vietnam extends repayment period, charges off debt and writes off debt in accordance with the decisions of the competent authority, it shall use the Accumulation Fund for Debt Payment to handle these cases.

Chapter V

IMPLEMENTATION PROVISIONS13

Article 41. Entry into force

1. This Decree comes into force as of July 1, 2018. This Decree replaces Decree No. 78/2010/ND-CP dated July 14, 2010 and Decree No. 52/2017/ND-CP dated April 28, 2017.

2. The finance mechanism, the eligibility conditions for on-lent loans of the programs or projects which are approved by the Prime Minister of Vietnam; the authorization contract and the on-lending agreement which had been signed before this Decree came into force shall continue to be implemented. If the specific eligibility conditions are not approved or changed by the Prime Minister of Vietnam, the Ministry of Finance of Vietnam shall report this case to the Prime Minister of Vietnam before negotiation.

Article 42. Implementation responsibilities

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VERIFICATION OF INTEGRATED DOCUMENT

PP. MINISTER
DEPUTY MINISTER




Vo Thanh Hung

APPENDIX I

ON-LENDING AGREEMENT FOR THE PEOPLE’S COMMITTEE OF PROVINCE OR CENTRALLY AFFILIATED CITY
(Enclosed with the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018)

SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
---------------

 Hanoi, date

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Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to Decree No. 97/2018/ND-CP dated June 30, 2018 of the Government of Vietnam on on-lending of the Government's ODA loans and foreign concessional loans;

Pursuant to the Foreign Loan Agreement No. .......... signed on............ month..........year.......... (hereinafter referred to as “Foreign Loan Agreement”) between the Government/State of Socialist Republic of Vietnam (hereinafter referred to as “Vietnam”) and (name of the foreign lender) for investing in the project (name of the Project) (hereinafter referred to as “Project”);

Pursuant to the Decision No. …./QD-TTg dated …………. of the Prime Minister of Vietnam (on approving the policy of investment and the financial mechanism of the project);

Pursuant to the Decision No. ……/QD-UBND dated ……….of the Chairperson of the People’s Committee of province/city (on approving the Project);

Pursuant to other relevant documents.

The intermediary and the end borrower are:

1. The intermediary is: The Ministry of Finance of Vietnam which is represented by the Department of Debt Management and External Finance.

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Tel: ………………………………………………………………………………………

Fax No. ………………………………………………………………………………………………

And: …………………………………………………………………………………………………..

2. The end borrower is: People’s Committee of province/city: …………………………………

Address: ……………………………………………………………………………………………..

Tel: ………………………………………………………………………………………

Fax No. ………………………………………………………………………………………………

Agreed to sign this On-lending Agreement on terms and conditions set forth below:

Article 1. Definitions

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Article 2. The terms and conditions of the On-lending Agreement

1. Terms and conditions for on-lending loans:

The intermediary on-lends a partial foreign loan/whole foreign loan in accordance with the Foreign Loan Agreement to the end borrower on the following conditions:

a) The on-lending currency and the debt recovery currency are: ……………………………………………..

b) The on-lending value is the total withdrawal capital which does not exceed………………………………..

c) The on-lending term:……includes the grace period……….from the day.........................

d) On-lending interest rate: … % per year based on the outstanding debts, including:

- External loan interest rate: .............% per year based on the outstanding debts.

- Management fees of on-lent loans are 0,25% per year based on the outstanding debts.

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dd) Late payment interest: If the end borrower cannot make repayment on principal, interest, fees and other relevant charges on time, it shall pay for the late payment interest which is equal to late payment interest rate specified in the Foreign Loan Agreement. If the Foreign Loan Agreement does not specify the late payment interest rate, this rate shall be determined as 150% of the on-lending interest rate specified in the Foreign Loan Agreement, applicable to the days overdue.

e) Interest and late payment interest shall be determined based on the actual number of days within a year which is ....days (according to the regulations in the Foreign Loan Agreement).

g) The repayment date is set based on the repayment date specified in the Foreign Loan Agreement. 

h) If Vietnam is responsible for implementing the provisions for quick repayment which are specified in the Foreign Loan Agreement, the terms and conditions specified in point c and d of this clause shall be adjusted accordingly.

i) The end borrower may repay the debt early if it satisfies the conditions for pre-maturity payment which are specified in the Foreign Loan Agreement, and the pre-maturity payment shall be approved by the foreign lender. If the end borrower does not satisfy the conditions for pre-maturity payment which are specified in the Foreign Loan Agreement, it can only repay debt early if it is approved by the Prime Minister of Vietnam. The end borrower shall pay all charges and costs related to the pre-maturity payment. The end borrower shall submit the application for pre-maturity payment to the intermediary within 90 days before the expected due date of the payment.

k) The end borrower shall make direct payments for the charges collected by domestic banks.

l) The repayment on loans derived from ODA loans or concessional loans shall be made on time by the end borrower before it pays its other debts.

m) If the end borrower is only able to pay part of its due liabilities, the order of priority for debt reduction is as follows: management fees of on-lent loans, late payment interest, overdue debt interest, due debt interest, other charges, overdue principal and due principal.

n) The end borrower may use foreign currency to make repayment if it receives the revenues from the project in foreign currency or if it buys the foreign currency from the domestic commercial banks.  If the end borrower repays the debt in Vietnam Dong, the exchange rate is the selling rate of this on-lending currency set by the Joint stock Commercial Bank for Foreign Trade of Vietnam at the time making repayment.

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The end borrower shall determine and pay off the principal, interest and charges of the on-lent loans in full and on time (if any) for the Ministry of Finance of Vietnam using the following account number:

- Name of the account: Department of Debt Management and External Finance (RECOVERING ON-LENT LOANS IN USD)

Account code: xxxx.x.xxxxxxx.xxxxx (if making repayment in USD); or

- Name of the account: DEPARTMENT OF DEBT MANAGEMENT AND EXTERNAL FINANCE (COLLECTING ON-LENT LOANS IN VND)

Account code: xxxx.x.xxxxxxx.xxxxx (if making repayment in VND).

- At Vietnam State Treasury; or

Another account specified in the written announcement of the Ministry of Finance of Vietnam.

2. The time of acknowledging debts:

The end borrower shall acknowledge the debts at the time the Government of Vietnam acknowledges the debts to the foreign lender.

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The intermediary shall complete the procedures for recording a debit for the end borrower according to the disbursement announcement of the foreign lender.

Quarterly, the intermediary shall compare the debt data including the withdrawal amount, repayment amount and amount of outstanding loans with the end borrower.

Article 3. Responsibilities of both parties

1. Responsibilities of the end borrower:

a) The end borrower shall cooperate closely with the intermediary in carrying out its obligations as prescribed in this On-lending Agreement and in the regulations on responsibilities of the end borrower which are specified in the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018.

b) The end borrower shall allocate principals from the local budget and/or other lawful capital sources as prescribed by laws to pay off the debts of on-lent loans (principal, interest, charges) in full and on time.

c) The obligation to pay the signed on-lent loans shall be fully calculated when making annual budget estimates and local budget’s medium-term financial plans.

d) The end borrower shall assign the Department of Finance of province/city to:

- Cooperate closely with the unit assigned to be the project manager, evaluate the capital management process of the Project, build a database on the provincial debt status, ensure that the on-lending is appropriate to the loan limit, and monitor and plan the repayment when it is due.

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2. Responsibilities of the project manager:

Quarterly and at least 15 days before the start of the repayment period prescribed in Point g, Clause 2, Article 2 hereof, the unit assigned to be the project manager by the end borrower shall make a report on the process and disbursement amount of the project and send it to both the Department of Finance and the end borrower in order for the Department of Finance in the province/city ............. to determine the required interest, charges and principal which are allocated from the provincial budget to pay off debts for the intermediary.

3. Responsibilities of the intermediary:

The intermediary shall guarantee that it will take the responsibility specified in this On-lending Agreement and in the regulations on on-lending of the Government's ODA loans and concessional loans for the People’s Committees of the provinces.

Article 4. Compensation and repayment

1. If the end borrower cannot fulfill its obligations in accordance with this On-lending Agreement, the intermediary may, at its sole discretion, to request the end borrower to comply with the regulations on sanctions and compensations; such actions shall include stopping the disbursements of foreign loans for the Project, stopping the disbursements for other projects which receive loans from the central budget and use these loans with right purposes or on-lend them to the budget of province/city, and stop considering the on-lent loans derived from other external loans.

2. None of regulations in the On-lending Agreement which harm or affect the rights of the Ministry of Finance of Vietnam including the right to compensation as prescribed by laws.

3. If the Vietnam’s rights to loan disbursement which are prescribed in the Foreign Loan Agreement are now suspended or terminated due to any cause, the disbursement of on-lent loans which is prescribed in this On-lending Agreement shall be suspended or terminated immediately. The end borrower shall fulfill all obligations prescribed in this On-lending Agreement for the disbursed on-lent loans which are derived from external loans. 

Article 5. Implementation provisions

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2. This On-lending Agreement shall be binding upon the organizations that succeed the People's Committee of the province/city in any form.

3. During the implementation process, both parties shall consider to supplement or amend this On-lending Agreement based on the actual situation or if it is necessary. All amended or added contents of this On-lending Agreement shall be made in writing and signed by both parties and be an integral part of this On-lending Agreement.

4. The On-lending Agreement shall be made into 2 original documents and both documents shall have similar legal validity. The intermediary shall keep 1 original and the end borrower shall keep 1 original.

This On-lending Agreement shall be signed at ………… on the mentioned date above, through the authorized representative of each party.

PEOPLE’S COMMITTEE OF THE PROVINCE/CITY……..
Authorized representative

Ministry of Finance of Vietnam
Authorized representative

APPENDIX II

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SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
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 Hanoi, date

 ON-LENDING AUTHORIZATION CONTRACT IN TERM OF THE INTERMEDIARY NOT BEARING THE CREDIT RISKS

 The loan is derived from ..... for the Project (Name of the project)

 No.:…../      /UQCVL/BTC-QLN

Pursuant to the Law on Civil Code dated December 8, 2015;

Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to Decree No. 97/2018/ND-CP dated June 30, 2018 of the Government of Vietnam on on-lending of the Government's ODA loans and foreign concessional loans;

Pursuant to the Foreign Loan Agreement signed on day ……month……year between the State/Government of Socialist Republic of Vietnam and (name of the foreign lender) (hereinafter referred to as “Foreign Loan Agreement”) for the Project…. (hereinafter referred to as “Project”);

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Pursuant to the Decision on approving the Project No. ....., date;

Ministry of Finance of Vietnam (hereinafter referred to as “Principal”), represented by the Department of Debt Management and External Finance.

Headquarters: 28 Tran Hung Dao - Hanoi

Tel: 024-22202828

Fax No. 024-22208020 or 024-22202868 and

Name of the Credit Institution which is intermediary (hereinafter referred to as “Authorized Party")

Headquarters: ……………………………………………………………………………………

Tel: ………………………………………………………………………………………..

Fax: ……………………………………………………………………………………………….

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Article 1. The Principal shall authorize the Authorized Party to on-lend the Government’s loans prescribed in the Foreign Loan Agreement to ……… (name of the end borrower) and/or any party that inherits all of rights and obligations of (name of the end borrower) under any form (hereinafter referred to as “end borrower) of the Project, with the following conditions:

1. The on-lending currency:

2. The on-lending value is the total withdrawal capital which does not exceed……………..

3. The on-lending term:……includes the grace period……….from the day.........................

4. Interests of on-lent loans are …% per year based on the outstanding debts including:

a) External loan interest rate: .............% per year based on the outstanding debts.

b) Management fees of on-lent loans are 0,25% per year based on the outstanding debts.

c) The loan loss provision for on-lending is ......%  per year based on the outstanding debts.

d) The charges paid to the foreign lender as prescribed in the Foreign Loan Agreement.

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6. The repayment date shall be set based on the repayment date specified in the Foreign Loan Agreement.

7. The end borrower shall take full responsibility for paying all charges and relevant costs that the Government of Vietnam must pay to the foreign lender as prescribed in the Foreign Loan Agreement, including…….., and other charges and costs.  The end borrower shall pay off these charges to the Authorized Party and this Party shall pay them for the Principal.

8. The date of debt acknowledgement is the date on which the Government of Vietnam acknowledges debt with the foreign lender as prescribed in the Foreign Loan Agreement.

9. Repayment date: the end borrower shall pay off the principal and interest for the Authorized Party once every six months, on......and on.......every year (as prescribed in the Foreign Loan Agreement).  The semi-annual principal repayment shall be made consecutively, starts from ........ends on............... The interest shall be determined from the first day of the repayment period when the outstanding loan occurs.

10. The end borrower shall make a pre-maturity payment after sending a written notification to the Authorized Party and the Principal within 90 days before the date on which the pre-maturity payment is made, and after getting an approval from the Prime Minister for the conditions specified in the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018.

11. If the end borrower repays the debt in Vietnam Dong, the exchange rate shall be the transferred selling rate of this on-lending currency set by the Joint stock Commercial Bank for Foreign Trade of Vietnam at the time making the repayment.

12. The end borrower shall make direct payments for the charges collected by domestic banks.

13. The end borrower shall repay all of its debt obligations specified in this Agreement and in the On-lending Agreement before repaying any of its other debts.

14. The end borrower shall provide their collateral including assets originating from the on-lent loans and other legal assets which are approved by the Authorized Party and the Principal as prescribed in the Government's Decree No. 97/2018/ND-CP dated June 30, 2018. The regulations on collateral shall be specified in the On-lending Agreement and shall comply with the relevant provisions in the Decree.

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Article 2. Responsibilities of the Principal

1. The Principal shall send the notifications of the disbursement of on-lent loans and the arising charges which are prescribed in the Foreign Loan Agreement to the Authorized Party, and this Party shall make an announcement on the debts of on-lent loans acknowledged with the end borrower.

2. The Principal may take charge or cooperate with the Authorized Party to inspect and supervise the use of and repayment on on-lent loans of the end borrower periodically or when it is necessary.

Article 3. Responsibilities of the Authorized Party14

The Authorized Party shall comply with the regulations on responsibilities of the authorized duly-authorized intermediary as prescribed in the Law on Public Debt Management and the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018 on on-lending of the Government's ODA loans and foreign concessional loans, clause 5 Article 1 of the Government’s Decree No. 79/2021/ND-CP dated August 16, 2021 on amendments to the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018 and certain responsibilities as follows:

1. Within 30 working days from the date on which this Contract and/or the On-Lending Agreement is signed in accordance with the conditions prescribed in Article 1. Within 15 days after signing the On-lending Agreement with the end borrower, the Authorized Party shall send 01 copy of this Agreement to the Principal for cooperation in supervising the process.

2. The Authorized Party shall rely on the notice of loan withdrawal sent by the Principal to announce and acknowledge debts with the end borrower.

3. The Authorized Party shall recover and repay debts to the Principal within the period of time specified by the Government of Vietnam from the date on which the Authorized Party receives the principal, interest, charges of foreign loans and the charges required to be collected and specified in Article 1 from the end borrower, and after it being entitled to the management fees of sub-loans which are specified in the Government's Decree No. 97/2018/ND-CP dated June 30, 3018.

4. The Authorized Party shall do the debt reconciliation with the end borrower quarterly, including the disbursement amount, amount of acknowledged debt, repayment amount, and amount of outstanding loans in a period and the cumulative outstanding loans.

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6. Once a year, at the time of formulating the state budget estimates, the Authorized Party shall aggregate borrowing and repayment plans of end borrowers for the Principal to include them in an annual plan for on-lending, repayment, and sub-loan limits of the Government of Vietnam.

Article 4. Implementation provision

1. This contract shall be made into 2 original documents, the Principal shall keep 1 original, the Authorized Party shall keep 1 original; this contract shall come into force from the date on which it is signed (or the date on which the Foreign Loan Agreement comes into effect based on the regulations in the Foreign Loan Agreement or the Decision of the Prime Minister of Vietnam).

2. The Principal and the Authorized Party shall implement the above regulations. Any amendment (if any) made to this contract shall be included in the Appendix document and shall comply with the laws.

The On-lending Authorization Contract is signed on the date mentioned above, at..........by the authorized representative of each Party.

 Representative of the Principal

 Representative of Authorized Party

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ON-LENDING AUTHORIZATION CONTRACT IN TERM OF THE INTERMEDIARY BEARING THE CREDIT RISKS
(Enclosed with the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018)

SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
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 Hanoi, date

 ON-LENDING AUTHORIZATION CONTRACT IN TERM OF THE DULY-AUTHORIZED INTERMEDIARY BEARING THE CREDIT RISKS

(Name of the loan) for the Project (Name of the Project)
No.:…../      /UQCVL/BTC-QLN

Pursuant to the Law on Civil Code dated December 8, 2015;

Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to Decree No. 97/2018/ND-CP dated June 30, 2018 of the Government of Vietnam on on-lending of the Government's ODA loans and foreign concessional loans;

Pursuant to the Foreign Loan Agreement signed on day ……month……year between the State/Government of Socialist Republic of Vietnam and (name of the foreign lender) (hereinafter referred to as “Foreign Loan Agreement”) for the Project…. (hereinafter referred to as “Project”);

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Pursuant to the Decision on approving the Project.

Ministry of Finance of Vietnam (hereinafter referred to as “Principal”), represented by the Department of Debt Management and External Finance.

Headquarters: 28 Tran Hung Dao - Hanoi

Tel: 024-22202828

Fax No. 024-22208020 or 024-22202868; and

Name of the Credit Institution which is intermediary (hereinafter referred to as “Authorized Party")

Headquarters: ……………………………………………………………………………………

Tel: ………………………………………………………………………………………..

Fax: ……………………………………………………………………………………………….

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Article 1. The Principal shall authorize the Authorized Party to on-lend the loans to……. (name of the end borrower) and/or any party that inherits all of rights and obligations of (name of the end borrower) under any form (hereinafter referred to as “end borrower) of the foreign loan........... (name of the donor country/ organization) according to the Agreement………with the following conditions:

1. The on-lending currency is:…………………………………….

2. The on-lending value is the total withdrawal capital which does not exceed……………

3. The on-lending term:……includes the grace period……….from the day......................

4. On-lending interest rate:...... % per year based on the outstanding debts.

a) External loan interest rate: .............% per year based on the outstanding debts.

b) Management fees of on-lent loans are 0,25% per year based on the outstanding debts.

c) The loan loss provision for on-lending is ......%  per year based on the outstanding debts.

d) The charges paid to the foreign lender as prescribed in the Foreign Loan Agreement.

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6. The repayment date shall be set based on the repayment date specified in the Foreign Loan Agreement.

7. The end borrower shall take full responsibility for paying all charges and relevant costs to the foreign lender as prescribed in the Foreign Loan Agreement, including management fees, commitment fees, loan withdrawal fees, insurance fees and other fees and costs. The end borrower shall pay off these fees to the Authorized Party, and this Party shall pay them back to the Principal.

8. The date of debt acknowledgment is the date on which the Government of Vietnam acknowledges debt with the foreign lender as prescribed in the Foreign Loan Agreement.

9. Repayment date: the end borrower shall pay off the principal and interest for the Authorized Party once every six months, on......and on.......every year (as prescribed in the Foreign Loan Agreement).  The repayment for the principal shall be made consecutively, from the date……. , Ends on date

10. If the Foreign Loan Agreement provides regulations on pre-maturity payment, the end borrower shall make this payment after sending a written notification to the Authorized Party and the Principal within 90 days before the date on which the payment is made, and shall be approved by the Authorized Party and the Principal.  If the Foreign Loan Agreement does not provide regulations on pre-maturity payment or the end borrower does not satisfy these regulations, the pre-maturity payment shall be approved by the Authorized Party.

11. If the end borrower repays the debt in foreign currency, the exchange rate is the transferred selling rate of this on-lending currency set by the Joint stock Commercial Bank for Foreign Trade of Vietnam at the time making the repayment.

12. The end borrower shall make direct payments for the charges collected by domestic banks.

13. The end borrower shall repay all of its debt obligations specified in this Agreement and in the On-lending Agreement before repaying any of its other debts.

14. The end borrower shall provide their collateral including assets originating from the on-lent loans and other legal assets which are approved by the Authorized Party and shall notify the Principal of these assets. The regulations on collateral shall be specified in the On-lending Agreement and shall comply with the relevant provisions in the Decree.

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16. The end borrower shall specify its commitments on gathering the revenues of the project to make repayment on time in the On-lending Agreement as prescribed in the Government’s Decree No. 97/2018/ND-CP dated June 30, 2018; commit that it will not cancel the authorization given to the duly-authorized intermediary unexpectedly; and it shall allow this agency to automatically deduct any of its loans to collect debts if it cannot make the repayment.

Article 2. Responsibilities of the Principal

1. The Principal shall notify the Authorized Party of the foreign lender’s loan disbursement notification for this Party to complete the procedures for acknowledging debts with the end borrower regarding the on-lent loans.

2. The Principal shall send a notification of the charges specified in Clause 7, Article 1 of this Contract (if any) to the Authorized Party; and this Party shall notify the end borrower for this end borrower to make debt repayment.

3. The Principal may take charge or cooperate with the Authorized Party to inspect and supervise the use of and repayment on on-lent loans of the end borrower periodically or when necessary.

Article 3. Responsibilities of the Authorized Party

1. Within 30 working days from the date on which this Contract is signed, the Authorized Party shall sign the On-lending Agreement with the end borrower in accordance with the conditions prescribed in Article 1. Within 15 days after signing the On-lending Agreement with the end borrower, the Authorized Party shall send 1 copy of this Agreement to the Principal for cooperation in supervising the on-lending process.

2. The Authorized Party shall complete the procedures for the end borrower to receive full debts based on the notification of loan disbursement sent by the Authorized Party or the foreign lender. 

3. The Authorized Party shall fulfill all of its obligations and take relevant responsibilities in accordance with the regulations in Clause 1, Article 40 of the Law on Public Debt Management, Article 23 of the Government's Decree No. 97/2018/ND-CP dated June 30, 2018 and in this contract.

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5. The Authorized Party shall do the debt reconciliation with the end borrower quarterly, including the disbursement amount, amount of acknowledged debt, repayment amount, and amount of outstanding loans in a period and the cumulative outstanding loans.

6. a) Once every six months in June and December, the Authorized Party shall send a notification of the debt recovery plan and the implementation process to the Principal; the Principle shall include this plan and process in the annual plan and prepare to make repayments to the foreign lender.

b) The Authorized Party shall make a report on the on-lending process, the debt status of the end borrower and the relevant contents prescribed in the Government's Decree No. 97/2018/ND-CP dated June 30, 2018.

7. The Authorized Party shall carry out periodic or sudden inspection of the project’s execution and the debt status of the end borrower in order to ensure the solvency of the end borrower.

8. If the End borrower does not make repayment on time:

a) After the Authorized Party uses sanctions or measures but still cannot recover debts of on-lent loans in full and on time from the end borrower including the principal, interest, charges and other relevant costs, it shall pay off the debts in full on behalf of the end borrower to the Principal within 2 working days after the due date specified in the On-lending Agreement; these amount shall be transferred to the Accumulation Fund for Debt Payment as prescribed in the On-lending Agreement and this contract.

b) The Authorized Party shall send a notification of these problems to the Principal when they occur.

Article 4. Implementation provision

1. This contract shall be made into 02 documents, the Principal shall keep 1 document, the Authorized Party shall keep 1 document; and this contract shall come into force from the date on which it is signed.

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 Representative of the Principal

 Representative of Authorized Party

1 This document is integrated from the following 2 Decrees:

- Decree No. 97/2018/ND-CP dated June 30, 2018 of the Government of Vietnam on on-lending of the Government's ODA loans and foreign concessional loans, effective as of July 1, 2018;

- Decree No. 79/2021/ND-CP dated August 16, 2021 of the Government of Vietnam on amendments to Decree No. 97/2018/ND-CP, effective as of October 1, 2021.

This integrated document does not replace the 2 Decrees mentioned above.

2 Decree No. 79/2021/ND-CP has the following promulgation grounds:

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Pursuant to the Law on Public Debt Management dated November 23, 2017;

Pursuant to the Law on State Budget dated June 25, 2015;

Pursuant to the Law on Public Investment dated June 13, 2019;

At the request of the Minister of Finance of Vietnam;

The Government of Vietnam hereby promulgates the Decree on amendments to Decree No. 97/2018/ND-CP dated June 30, 2018.”

3 This Clause is amended by Clause 1 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

4 This Clause is amended by Clause 2 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

5 This Clause is annulled by Article 2 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

6 This Clause is amended by Clause 3 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

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8 This Clause is supplemented by Clause 5 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

9 This Clause is amended by Clause 6 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

10 This Clause is amended by Clause 7 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

11 This Clause is amended by Clause 8 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

12 This Point is amended by Clause 9 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.

13 Article 3 and Article 4 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021, are as follows:

“Article 3. Entry into force

1. This Decree comes into force as of October 1, 2021.

2. The programs and projects with the investment policies approved by the competent authority, the finance mechanism, loan eligibility conditions before the date of entry into force of the Decree shall be further implemented as per the approval of the competent authority.

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Article 4. Implementation responsibilities

Ministers, Heads of ministerial-level agencies, Heads of Governmental agencies, the Presidents of People’s Committees of provinces or central-affiliated cities, relevant enterprises, organizations and individuals shall implement this Decree.”

14 Article 3 Appendix II enclosed with Decree No. 97/2018/ND-CP is amended by the Appendix enclosed with Decree No. 79/2021/ND-CP according to Clause 10 Article 1 of Decree No. 79/2021/ND-CP, effective as of October 1, 2021.