Draft law puts external loans under strict control
HCMC - Provinces and ministries would have to go through the Government to take out foreign loans, instead of directly accessing foreign lenders, to fund their socio-economic development projects, according to a draft law on control of public debt.
The draft law prepared by the Ministry of Finance states that local governments, ministries and agencies must submit their plans to use official development assistance (ODA) loans for their projects and programs to the Prime Minister for consideration and approval. The plans should clarify the need to use ODA loans, investment purpose and project scale, the efficiency and return on investment of the projects, and their repayment plan.
The draft law requires the Ministry of Planning and Investment, in collaboration with the Ministry of Finance and relevant agencies, to appraise the plans and report their viability to the Prime Minister for consideration.
The Ministry of Planning and Investment should work out a review report on the need of local governments and agencies to use ODA loans for their investment projects that have already got the PM’s nod and help look for finances for projects.
Local governments, ministries and agencies should carry out the feasibility studies for their projects and programs based on the ‘in principle’ approval of the PM for submission to competent agencies for approval. Then, the projects will be forwarded to authorities for approval in line with the prevailing regulations.
The Ministry of Finance will work with ministries and localities which have projects using ODA loans over borrowing terms before proceeding with borrowing agreements.
Ministries, agencies and localities should prepare lists of projects and programs subject to allocation of State money for submission to competent authorities to approve the use of the Government’s source of development investment.
The Ministry of Finance will check and sign on-lending agreements or authorize agencies to strike such deals for the eligible projects and programs, according to the draft law. The ministry should report budget estimates for the loans sourced from the State budget to competent agencies for approval.
The draft law also puts an emphasis on the efficient use of the ODA loans. Ministries and local governments will have to earmark their budgets to timely settle payments for on-lending of ODA loans.
Ministries and local governments will be required to get the PM’s nod for their plans to seek and use concessional loans for investment.
External commercial loans should be taken out for lending-on for the projects and programs with a high return on investment. The investors will have to submit to the PM their reports on how to use the capital source for their projects.