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- 22 / 07 / 2018 -
New regulation on public debt management

On June 30, 2018, the Government issued Decree No.94/2018/ND-CP regulating on public debt management. This Decree took effect since July 1, 2018.
Accordingly, Decree No.94/2018/ND-CP specifies a number of specific contents as follows:
1. The public debt security index is formulated on the basis of the orientation on the five-year socio-economic development plan; the implementation of public debt safety targets over the last 5 years; growth rate and internal saving rate of the economy; the State budget revenue and expenditure balance. When the public debt safety index meets the public debt safety warning threshold, the Ministry of Finance shall submit to the Government or the National Assembly Standing Committee for measures to ensure that public debt safety targets do not exceed the public debt ceiling.
2. Risks for public debt include the risk of interest rates, foreign exchange rates due to fluctuations in the financial market; liquidity risk due to the lack of liquid financial assets to fully and timely fulfill the debt obligations as committed, including repayment capacity of the central budget and local budgets; risks due to fluctuations in the financial market affect the mobilization of capital leading to high debt repurchase or loss of debt; credit risk is due to re-borrowers, guaranteed subjects can not pay debts in full and on time; other types of risk can affect public debt safety.
The risk assessment is carried out periodically in association with the five-year loan and repayment plan, the three-year public debt management program and the annual plan for borrowing and repaying the public debt. Based on the risk assessment, the Ministry of Finance shall propose solutions to prevent risks to public debts; provincial People’s Committees propose solutions to prevent risks to local government debt.
Basing on the risk assessment and the level of risk effect for each debt or list of debts, the Ministry of Finance shall elaborate the debt restructuring plan and submit it to the Prime Minister for decision and organize the implementation thereof. The Provincial-level People’s Committees shall report to the People’s Councils of the same level for decision the debt restructuring plans of local administrations and implement.
Through detailed and specific regulations on public debt management, Decree No.94/2018/ND-CP is expected to enhance the sense of responsibility, professional skills, as well as improve the effectiveness of state management of competent agencies and individuals.