Requirements for localities to access on-lending ODA loans

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Báo điện tử CP English - 1 month(s) ago 1 readings

VGP – The Government has recently issued Decree No. 52/2017/ND-CP on on-lending of the Government’s foreign loans to the People’s Committees of provinces and centrally run cities (below referred to as the provincial-level People’s Committees), specifying the requirements for the provincial-level People’s Committees to access on-lending official development assistance (ODA) and preferential loans.

Specifically, the provincial-level People’s Committees are eligible for on-lending loans if they satisfy the following requirements:

1- They have projects which are permitted by authorized agencies to mobilize loans for development investment, or projects which have reciprocal capital of local budget in the form of public-private partnership, are under spending tasks of localities or are under the local medium-term public investment plan approved by the authorized level at the Law on Public Investment.

2- They have projects which are arranged with reciprocal capital to implement in line with current regulations.

3- The total outstanding loan of local budget at the time of verifying the investment plan for projects and programs does not exceed the outstanding loan quota of local budget stipulated in the Law on State Budget.

4- They have no overdue on-lending debts exceeding 180 days.

5- The annual debt payment liability of the provincial-level People’s Committees for ODA and preferential loans does not exceed 10% of local budget revenueas decentralized at the time of considering the on-lending loans.

On-lending rate of ODA loans

The decree also stipulates the on-lending rate of ODA and preferential loans. Accordingly, the on-lending rate of ODA loans for socio-economic development investment projects under spending tasks of local budget is proposed by the provincial-level People’s Committees.

Specifically, on-lending rates of 10% and 20% of ODA loans are applied to provinces and municipalities with the supplemental values from the central budget accounting for at least 70% and from 50% to below 70% of the total expenditure of the local budget balance, respectively.

Localities with the supplemental values from the central budget accounting for below 50% of the total expenditure of the local budget balance are subject to an on-lending rate of 30% of ODA loans.

An on-lending rate of 50% of ODA loans is applied to localities with contributions to the central budget (except for Ha Noi and Ho Chi Minh City).

Ha Noi and Ho Chi Minh City are eligible for an on-lending rate of 80% of ODA loans.

On-lending rate of preferential loans

The on-lending rate of preferential loans to socio-economic development investment projects, which are under spending tasks of local budget, is proposed by the provincial-level People’s Committees. Specifically, an on-lending rate of 30% of preferential loans is applied to provinces and municipalities with the supplemental values from thecentral budget accounting for at least 70% of the total expenditure of the local budget balance, and those with districts under the government’s Resolution No. 30a/2008/NQ-CP dated February 27, 2008.

Localities receiving the supplemental values from the central budget, except for the abovementioned ones, are subject to an on-lending rate of 70% of preferential loans.

Localities with contributions to the central budget are eligible for the on-lending rate of 100% of preferential loans.

The on-lending rate of ODA and preferential loans is 70% if the on-lent capital is used as localities’ reciprocal capital to public-private partnership (PPP) projects.

The decree takes effect on June 15, 2017.

By Vien Nhu

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