The Prime Minister has recently requested local authorities to use foreign loans for development investment projects only, not for payment of local regular expenses.
Under Directive 37/CT-TTg, intensifying the management and supervision of loans for on-lending to local authorities, provinces and centrally run cities nationwide are requested to keep their borrowing and debt payment levels within their approved loan borrowing limits prescribed in the 2015 Law on the State Budget.
The Directive says that the country had to borrow and on-lend both ODA and concessional loans with higher and higher interest conditions in the context that public debts and government debts are piling up and ODA loans are more and more scarce.
Therefore, it requests localities to prioritize the use of highly preferential ODA capital for their important and urgent programs and projects, and the disbursement of on-lent ODA and foreign concessional loans as committed with foreign donors when implementing foreign loan borrowing and repayment plans.
In case the use of on-lent loans makes the outstanding loan balance exceed their permitted loan limits or annual borrowing estimates approved by competent authorities, localities will have to cut down other loans as planned or promptly repay outstanding loans in order to keep them within the prescribed limits.
When adjusting their foreign loan borrowing and repayment plans, localities are required to report adjustments to the Ministry of Finance for appraisal and submission to the Government for subsequent submission to the National Assembly for decision.- (VLLF)