THE NATIONAL ASSEMBLY
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Law No. 29/2009/QH12
SOCIALIST REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
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LAW ON PUBLIC DEBT MANAGEMENT
Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam, which was amended and supplemented under Resolution No. 51/2001/QH10;
The National Assembly the Law on Public Debt Management.
Chapter I
GENERAL PROVISIONS
Article 1.
Scope of regulation
This Law provides for the management of public debts, which covers the borrowing, use of loans and debt payment and public debt management operations.
2. Public debts under this Law comprise:
a/ Government debts;
b/ Government-guaranteed debts;
c/ Debts of local administrations.
Article 2.
Subjects of application
This Law applies to organizations and individuals involved in the borrowing, use of loans, debt payment and public debt management.
Article 3.
Interpretation of terms
In this Law, the terms below are construed as follows:
1. Debt means a loan to be repaid, including the principal, interests, charges and other related expenses at a point of time, which arises from the borrowing by a borrower that is permitted to take loans under the law of Vietnam.
2. Government debt means a debt arising from a domestic or foreign loan which is signed or issued in the name of the State or the Government or a loan signed or issued by or under the authorization of the Ministry of Finance under law. Government debts do not include debts issued by the State Bank of Vietnam to implement monetary policies in each period.
3. Government-guaranteed debt means a domestic or foreign loan borrowed by an enterprise or financial or credit institution under the Government's guarantee.
4. Debt of local administration means a debt signed or issued by or under the authorization of the People's Committee of a province or centrally run city (below referred to as provincial-level People's Committee).
5. National foreign debts means the total of foreign debts of the Government, government- guaranteed debts and debts borrowed and paid by enterprises and other organizations themselves under the law of Vietnam.
6. Borrowing means the process of creating the debt payment liability through the conclusion and performance of a loan treaty, contract or agreement (below referred to as loan agreement.
7. Borrower means the borrowing party in a loan agreement or the issuance of debt instruments that is liable for repaying the principal to the lender according to the conditions and terms of the loan agreement or the issuance.
8. Borrower of government loan (below referred to as sub-sub-borrower) means an enterprise, financial or credit institution, or provincial-level People’s Committee which signs an onlending agreement land acknowledges debts with the onlending agency to use the Government's loan under the onlending mechanism.
9. Guaranteed borrower means a borrower who is guaranteed by the Government. Guaranteed borrowers include those receiving the lawful transfer from borrowers under the guarantor’s approval.
10. Short-term loan means a loan with a term of less than one year.
11. Medium- or long-term loan means a loan with a term of one year or more.
12. Foreign loan means a short, medium or long-term loan with or without interest borrowed by the State or Government or an enterprise or organization of Vietnam from a foreign government, territory, organization or individual or an international financial organization.
13. Official Development Assistance (ODA) loan means a loan borrowed in the name of the Vietnamese State or Government from a donor being a foreign government, bilateral donor organization, transnational organization or inter-governmental organization with non-refundable funds (preferential component) accounting for at least 35% for a binding loan, and 25% for a non-binding loan.
14. Concessional loan means a loan which is provided under conditions more preferential than those for a commercial loan, but its preferential component does not reach the level set for ODA loans.
15. Commercial loan means a loan provided under market conditions.
16. Debt instrument means a bill, draft, bond, public bond or other instrument which gives rise to a debt payment liability.
17. Government bond means a bond issued by the Ministry of Finance to raise funds for the state budget or a specific work or investment project.
18. Government-guaranteed bond means a bond with a term of one year or more which is issued by an enterprise to raise funds for an investment project under the Prime Minister's designation and guaranteed by the Government.
19. Bond of local administration means a bond with a term of one year or more, which is issued by or under the authorization of a provincial-level People's Committee to raise funds for local works and investment projects.
20. Debt payment means the payment of a due debt, including the principal, interests, charges and other related expenses arising from the borrowing.
21. Debt refinancing means new borrowing to pay one or many existing debts.
22. Debt restructuring means the performance of operations in order to change the conditions and terms of an existing debt without creating a new debt payment liability.
23. Debt portfolio restructuring means the performance of operations in order to restructure each debt in a debt portfolio, including debt refinancing, debt transfer and sale, currency swap, interest rate and other operations to mitigate debt payment liabilities and restrict risks.
24. Debt settlement means taking measures to handle a debt in case of insufficient solvency or insolvency.
25. Onlending agency means the Ministry of Finance or a financial or credit institution authorized by the Ministry of Finance to re-lend the Government's foreign loans.
26. Government guarantee means the Government's commitment with the lender to fulfill the debt payment liability in case a borrower fails to fulfill or fully fulfill the debt payment liability for a debt due.
27. Projected debt liability means a debt obligation which has not arisen but is likely to arise when occurs at least one of specified conditions.
28. Borrowing limit means the maximum net annual loan (actually received after subtracting principal payments).
29. Debt limit against the gross domestic product (GDP) means the maximum ratio of outstanding debts to GDP in each period.
Article 4.
Contents of state management of public debts
1. To elaborate, promulgate and implement legal documents on public debt management.
2. To set and promulgate debt safety norms, objectives and orientations for loan raising and use and public debt management in each period; a system of indicators to control government debts, public debts and national foreign debts and detailed annual plans on borrowing and debt payment.
3. To raise, allocate and use loans and public debts properly and efficiently and assure the fulfillment of the debt payment liability.
4. To supervise the raising, allocation and use of loans and debt payment, to manage public debts and fiscal risks, to ensure debt safety and national financial security.
5. To evaluate the effectiveness of loan use and public debt management.
6. To sum up, report and publicize information on public debts.
7. To propagate and disseminate policies and laws on public debt management.
8. To inspect and examine the observance of the law on public debt management.
9. To handle violations and settle complaints and denunciations in the implementation of the law on public debt management.
10. To train personnel in public debt management operations.
11. To carry out international cooperation in public debt management.
Article 5.
Principles for public debt management
1. The State uniformly and comprehensively manages public debts, from raising, allocation and use of loans to debt payment.
2. To ensure debt safety within the limit approved by competent authorities, national financial security and macro-economic balance.
3. To ensure effective borrowing and use of loans; not to borrow short-term loans for long-term investment. To use foreign commercial loans only for programs and projects capable of direct capital recovery and assuring solvency.
4. Borrowers shall take responsibility for fully fulfilling their debt payment liability.
5. To ensure publicity and transparency in the raising, allocation and use of loans, debt payment and public debt management. Programs and projects using loans of the Government or local administrations are subject to audit by the State Audit or an independent audit institution.
6. All debt liabilities of the Government are treated equally.
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