| THE PRIME MINISTER -------- No.56/2012/QD-TTg | SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------- Hanoi, December 21, 2012 |
DECISION
PROMULGATING A REGULATION OF MANAGEMENT AND HANDLING OF RISKS TO THE LIST OF PUBLIC DEBTS
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 the Government's the Decree No.79/2010/ND-CP of July 14, 2010 on public debt management operation;
At the proposal of the Minister of Finance;
The Prime Minister issues a Decision on Regulation of management and handling risks to the list of public debts,
Article 1. To issue together with this Decision the Regulation on management and handling of risks to the list of public debts.
Article 2. This Decision takes effect from March 01, 2013.
Article 3. The Ministers, heads of ministerial-level agencies, presidents of People's Committees of provinces and cities directly under the Central Government, heads of the agencies, organizations and individuals related to risk management and handling for public debts are responsible for the implementation of this Decision./.
| | PRIME MINISTER Nguyen Tan Dung |
REGULATION
ON MANAGEMENT AND HANDLING OF RISKS TO THE LIST OF PUBLIC DEBTS
ON MANAGEMENT AND HANDLING OF RISKS TO THE LIST OF PUBLIC DEBTS
(Issued together with the Decision No.56/2012/QD-TTg 21 12 2012 of the Prime Minister)
Chapter 1.
GENERAL PROVISIONS
Article 1. Scope of regulation
1. This Regulation defines the management and handling of risks to the list of public debts, including risk detection, risk assessment, risk handling and responsibilities of the concerned organizations and individuals in the management and handling of risks to the list of public debts.
2. The risks set out in this Regulation include:
a) Market Risk.
b) Liquidity risk.
c) Credit risk.
d) The operational risk.
3. Financial tools for handling risks to the public debt list, including:
a) Derivative transactions include: options and swap transactions.
b) The debt restructuring activities, including: debt extension, debt frozen, debt cancellation, refinancing, debt swap and acquisition.
Article 2. Application subjects
This Regulation applies to the agencies, organizations and individuals involved in the management and handling of risks to the public debt list.
Article 3. Interpretation of terms
In this Decision, apart from the terms explained in the Law on Public Debt Management dated June 17, 2009 and the Decrees guiding the implementation of the Law on Public Debt Management, the terms below are construed as follows:
1. Market risk means the possibility of loss of public debt due to the fluctuations of interest rate and exchange rate on the financial market.
2. Credit risk means the possibility of loss of public debt due to the Government's loan borrower, the guarantee of the Government fails to perform full and timely loan repayment obligations in accordance with the conditions and terms of the loan agreement or issuance.
3. Liquidity risk means the possibility of loss of public debt due to failure to raise capital, lack of liquidity financial asset to perform fully, timely due debt obligations or commitments to look for new loans with unusually high costs compared to the market conditions.
4. Operational risk means the possibility of losses derived from a process to implement the activities of public debt management; human; machinery system used in public debt management activities which are incomplete, do not meet demand on management or derived from external factors of the process to make the public debt management activities (such as database of debts stolen/damaged, papers relating to the public debt management process which is forged...).
5. Interest rate option contract means a legal agreement between two parties that allows the option buyer to have the right to fix interest rate of a loan or nominal loan at a specific time in the future.
6. Currency option contract means a legal agreement that allows the option buyer to have the right to buy or sell a certain amount of nominal foreign currency with an exchange rate determined at a specific time in the future.
7. Currency swap contract means a legal binding agreement between two parties to exchange two different currencies by an agreed duration and at the end of the time limit, the parties must return to each other the original principal amount with a rate determined at the commencement of the transaction.
8. Interest rate swap contract means a legal agreement whereby each party commits to pay to the other party an amount of interest by a type of interest rate (floating or fixed) committed on a certain amount of principal in a determined period of time.
9. Debt extension means the permission to extend the repayment term committed and during the debt extension, the borrower/re-borrower must still pay for the loan interest.
10. Debt frozen means the matter that a part or all of the debts shall be suspended the collection in a certain time and interest incurred shall not be counted during the period of the debt frozen.
