Approval of the Medium-Term Debt Management Program

According to the Medium-Term Debt Management Program 2013-2015 recently approved by the Prime Minister.approveThe goal is to keep public debt below 65% of GDP by 2015, with government debt not exceeding 50% of GDP and national foreign debt not exceeding 50% of GDP.

In addition, domestic and foreign borrowing will be used to offset the state budget deficit, with the aim of gradually reducing the deficit to below 4.5% of GDP by 2015 (including government bonds). Specifically, the target for 2013 is 4.8% of GDP; and for 2014 it is approximately 4.7% of GDP.

Ensure that the ratio of state foreign exchange reserves to the total short-term foreign debt of the country is maintained at over 200% annually.

Short-term loans must not be used to finance medium- and long-term projects.

One of the solutions of the Program is to organize the mobilization of additional loan capital to balance the State budget and invest in socio-economic development. This requires balancing needs and effectively implementing the Government's plan for mobilizing and using domestic and foreign loans for the period 2013-2015, prioritizing the selection of long-term loans with low borrowing costs and reasonable risk levels.

In addition, continue to control the borrowing limits of local governments in accordance with current laws on state budget management.

Businesses and credit institutions have the responsibility and obligation to use borrowed capital for its intended purpose, and are prohibited from using short-term loans to invest in medium- and long-term projects. They bear all risks and are legally responsible for the process of raising, using borrowed capital, and repaying debts on time.

Strengthening risk management and restructuring some public debt. Specifically, studying options for handling exchange rate risks, swapping floating interest rates for some debts in the current public debt portfolio; organizing the classification of credit-risk debts and issuing criteria for evaluating and ranking the repayment capacity of borrowers and guarantors;...

Improve the efficiency of using borrowed capital for relending.

Another solution of the Program is to strictly control the issuance and management of government guarantees, and for the time being, not to consider guarantees for international bond issuance. Businesses or commercial banks, if they have the need, can proactively issue international bonds without government guarantees.

In addition, domestic loan guarantees should only be considered for urgent projects and key national projects that have been approved by the Prime Minister.

To improve the efficiency of using borrowed capital for relending, it is necessary to strengthen the risk-sharing mechanism between the State and enterprises/investors; and between the Government and local authorities for the Government's foreign loans used for relending.
In addition, the mechanism for relending to local governments should be expanded to enhance local initiative and accountability, while ensuring fair treatment among localities.

The use of re-lending funds must be selective, avoiding dispersion and focusing on high-priority projects, programs, and initiatives; continued emphasis should be placed on efficiency criteria when selecting specific projects.

Strengthening the application of relending methods through credit limits for capable commercial banks in cases where lenders provide loans not under the project financing method, in order to enhance the responsibility of both the relending agency and the relending borrower.

According to (Chinhphu.vn) - LT