On June 26, 2018, the Government issued Decree No.91/2018/ND-CP on granting and management of sovereign guarantees. This Decree took effect since July 1, 2018.
Accordingly, the eligibility for sovereign guarantees and limit on sovereign guarantees are as follows:
– It has legal status, established lawfully in Vietnam and operated for at least 3 consecutive years prior to the date of submission of the dossier of request for approval of the guarantee or guaranty policy;
– It has not incurred loss for the last 3 consecutive years according to the audit report, except for the loss incurred due to adoption of state policies as approved by competent authority;
– It has no overdue debt when the application for a sovereign guarantee is submitted, including overdue debts with re-lending agencies, overdue debts with Debt Repayment Fund, overdue debts with the lenders for sovereign guarantees loans and overdue debts with other credit institutions.
– It has a feasible financial plan finalized by the Ministry of Finance and reported to the Prime Minister for approval;
– It has a minimum percentage of owner’s equity in the project of 20% of the total investment capital of the project approved by the competent agency, enclosed with the plan of allocating specific owner capital according to the progress of the project implementation;
– In case of issuance of bonds, the enterprise must satisfy the conditions for issuance of securities for notarization in accordance with the laws on securities and securities market.
– It has established and operated as per the law and raised funds in accordance with its charter promulgated by the competent authority;
– The guarantee amount is within the annual guarantee limit approved by the Government;
– The sovereign-guaranteed loan shall be used to carry out the state credit program as prescribed by the Government.
– For projects approved by the National Assembly or the Government for investment policies, the guarantee level shall be the original value of the loan or bond issue at maximum 70% of the total investment amount according to the investment decision of the authorized level.
– For projects approved by the Prime Minister for investment decisions, the guarantee level shall be the original value of the loan or bond issue at the maximum of 60% of the total investment amount according to the investment decisions.
– The Government guarantee for bonds issued by the policy bank is 100% maximum of the limit for issuance of government guaranteed bonds approved by the Prime Minister.
With specific and detailed regulations, Decree No.91/2018/ND-CP has been tightened in terms of both eligibility for sovereign guarantees and limit on sovereign guarantees as compared with previous documents, in line with the policies set by the Party and the State in the budget expenditures at the beginning of the year.
