Decree on issue and management of Government guarantees promulgated

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The government guarantee is made in the form of letter of guarantee, contract of guarantee or guarantee documents (Letter of Guarantee). The Governmentissues Letters of guarantee only and does not re-issue the Letter of Guarantee.

The entities who are granted the Government guarantee are in accordance with the provisions in Article 32 of Law on public debt management and meet the specific requirements mentioned in this Decree.

Conditions for issue of Government Guarantee

This Decree clarifies the conditions for issue of Government Guarantee for investment programs and projects; and credit programs with targets of the State.

For investment programs and projects, the Decree provides borrowers and entities issuing bonds granted the Government Guarantee when: 1 – the borrowers and entities issuing bonds were credit institutions established legally in Vietnam and have legal status in accordance with the law of Vietnam; 2. The loans, and bond issue amounts to be used to implement the credit programs with the targets of the State are in accordance with the organizational and operational provisions of those credit institutions; 3. Being approved by the competent authorities for issue of government guarantee; 4. The loans and bond issue amounts requesting for issue of Government Guarantee have registered the plan of Government Guarantee issue in line with provisions in Article 7 of this Decree and in the Government Guarantee level approved by the Prime Minister according to the provisions in Articles 8 of this Decree; 5. Credit institutions must meet the prudential ratios in operations of credit institutions as stipulated by the State Bank and are not subject to special control.

Guarantee level

The Decree regulates the Government Guarantee level for original value of loans and bond issue amounts for investment programs and projects that do not exceed 70% of the total investment level of programs and projects.

The Government Guarantee is applied for each specific program and project under provisions of the Investment Law No. 67/2014/QH13 dated 26 November, 2014 and Public Investment Law No. 49/2014/QH13 dated 18 June 2014.

Particularly, for projects approved by the Government and National Assembly or projects subject to being deployed urgently, the Guarantee level for original value of loans and bond issue amounts is maximum 70% of the total investment under the investment Decision.

For projects under group A with total investment from 2,300 billion vnd or more approved by the Prime Minister on the investment policy, the Guarantee level for original value of loans and bond issue amounts is maximum of 60% of the total investment under the investment Decision.

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For other projects, the Guarantee level for original value of loansand bond issue amounts is maximum of 50% of the total investment under the investment Decision.