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Gov’t specifies re-lending ratio of ODA, preferential loans to local authorities

5/3/2017 1:30:00 PM

 

QNP - The Government has recently promulgated Decree No. 52/2017/ND-CP on re-lending of Government’s ODA loans and preferential loans to provincial People's Committees.

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The Decree was designed to increase local authorities’ shares of the Government’s financial burden and promote the effective use of Government’s foreign loans.

Specifically, provincial People's Committees must meet the following conditions to be eligible for re-borrowing Government’s ODA loans and preferential loans:

1. Having project(s) approved by competent authorities to mobilize loans for investment in socio-economic development or project(s) with capital contributions from local budgets under public-private partnership (PPP) mechanism. Expenditure for the project(s) is within the local budget estimates and under the local medium-term investment plan approved by competent authorities as stipulated under the Law on Public Investment.

2- Reciprocal capital contributions to the project must comply with the current legislation.

3- Total deficit of local budgets at the time of appraisal of investment policy for the program(s) or project(s) does not exceed the debt limit of local budgets as stipulated under the Law on State Budget.

4- There is no debt re-borrowed from the Government overdue more than 180 days.

5- Annual debt repayment obligations of provincial People's Committees for re-borrowing ODA loans and preferential loans shall not exceed 10% of the local budget revenues allocated by administrative level at the time of appraisal of the re-borrowings.

Re-lending ratio of ODA loans

The Decree also regulates re-lending ratio of ODA. Accordingly, re-lending ratio of ODA for investment projects for socio-economic development under spending tasks of local budgets shall be proposed by provincial People's Committees.

Specifically, if the state budget allocated to a locality accounts for 70% and above of the local budget expenditures, the re-lending ratio shall be 10%.

A re-lending ratio of 20% of ODA capital shall be applied if the central budget allocated to a locality accounts between 50% to under 70% of the local budget expenditures.

A re-lending ratio of 30% shall be applied if the central budget allocated to a locality accounts for under 50% of the local budget expenditures.

A re-lending ratio of 50% of ODA capital shall be applied to localities that have contributed to the central budget (except for Ha Noi and Ho Chi Minh City).

A re-lending ratio of 80% shall be applied to Ha Noi and Ho Chi Minh City.

Re-lending ratio of preferential loans

Re-lending ratio of preferential loans for investment projects for socio-economic development under spending tasks of local budgets shall be proposed by provincial People's Committees.

Specifically, a re-lending ratio of 30% of preferential loans shall be applied to a locality if central budget allocated to it makes up 70% or more of the local budget expenditures and district(s) of such localities is enlisted in the Government’s Resolution No. 30a/2008/NQ-CP dated February 27, 2008.

A re-lending ratio of 70% shall be applied to localities receiving central budget allocation apart from the above-mentioned localities.

Localities that have contributed to the central budget shall apply a re-lending ratio of 100% of preferential loans.

A re-lending ratio 70% shall be applied to ODA loans and preferential loans used for local public contributions to public-private partnerships (PPP) projects.

The decree shall be effective from June 15, 2017./.



Source: VGP