Gov’t Guarantee Reaches 70 Pct of Project Value

According to the draft, the limit of government guarantee includes the guarantee limit for domestic and international loans and bond issues. The limit of guarantee for foreign loans and international bond issues belongs to the foreign borrowing limit and the government guarantee for foreign loans, drafted by the Ministry of Finance from companies’ registration for guarantees and the Government’s policies on government guarantee approved annually by the Prime Minister in accordance with the Law on Public Debt Management.

 

The Ministry of Finance grants government guarantees under the Prime Minister’s decisions for every round of loan or bond issue according to the guarantee limit approved annually.

 

Where the government guarantee limit approved in the year runs out and there are still requests for government guarantee granted for important, urgent projects, particularly socioeconomic development works ratified by the National Assembly and the Government, the ministry shall report the case to the Prime Minister for limit adjustment. The adjustment must ensure national debt safety.

 

Government guarantee cannot exceed 70 percent of project/programme investment value, which includes all costs related to loans.

 

Specifically, urgent projects or projects approved by the National Assembly will have a government guarantee of at most 70 percent of investment value, based on investment decisions. Important projects approved by the Prime Minister will have a government guarantee of at most 60 percent of total investment value. Ordinary projects will have a government guarantee of at most 50 percent of total investment value.

 

The fee for government guarantee is variable, depending financial capacity of enterprises or degree of risks among others, but it cannot exceed 1.5 percent of guaranteed value outstanding.

 

Fee will not be collected on guaranteed bond issues of policy banks, loans or bond issues to carry out typical programmes and projects ratified by the National Assembly and the Prime Minister.