Nội dung toàn văn Decision No. 26/2000/QD-NHNN7 of January 19, 2000, on the issuance of the regulation on the formulation and management of the annual plan of total limit on foreign commercial borrowing by enterprises
STATE BANK OF VIETNAM | SOCIALIST REPUBLIC OF VIETNAM |
No. 26/2000/QD-NHNN7 | Hanoi, 19 January, 2000 |
DECISION
ON THE ISSUANCE OF THE REGULATION ON THE FORMULATION AND MANAGEMENT OF THE ANNUAL PLAN OF TOTAL LIMIT ON FOREIGN COMMERCIAL BORROWING BY ENTERPRISES
THE GOVERNOR OF THE STATE BANK
Pursuant to the Law on the State Bank of Vietnam No. 01/1997/QH10 dated 12 December, 1997;
Pursuant to the Decree No. 90/1998/ND-CP dated 7 November, 1998 of the Government on the issuance of the Regulation on the management of foreign borrowing and repayment;
Pursuant to the Decree No. 15/CP dated 02 March, 1993 of the Government on the assignment, authority and responsibility for the State management of the ministries and ministerial-level agencies;
Upon the proposal of the Director of the Foreign Exchange Control Department,
DECIDES
Article 1. To issue in conjunction with this Decision "the Regulation on the formulation and management of the annual plan of total limit on foreign commercial borrowing by enterprises".
Article 2. This Decision shall be effective after 15 days from the date of signing.
Article 3. The Director of the Administration Department, the Director of Foreign Exchange Control Departments, the Heads of the State Bank units shall be responsible for the implementation of this Decision.
| FOR THE GOVERNOR OF THE STATE BANK |
THE REGULATION
ON THE FORMULATION AND MANAGEMENT OF THE ANNUAL PLAN OF TOTAL LIMIT ON FOREIGN COMMERCIAL BORROWING BY ENTERPRISES
(issued in conjunction with the Decision No. 26/2000/QD-NHNN7 dated 19, January, 2000 of the Governor of the State Bank)
Chapter I
GENERAL PROVISIONS
Article 1. The annual plan of total limits of foreign commercial borrowings by enterprises shall be the total equivalent foreign currency amount in USD provided by the Prime Minister for the foreign borrowing by the enterprises during the year.
Article 2. The Formulation and management of the annual plan of total limit shall be carried out on the following principles:
1. Taking into account the debt service capability as well as ensuring other macro-economic indicators of the economy.
2. Satisfying a part of requirements for investment funds by the enterprises and effective use of domestic resources.
Chapter II
FORMULATION OF THE PLAN OF TOTAL LIMIT
Article 3. The State Bank shall take the lead, in cooperation with the Ministry of Planning and Investment, the Ministry of Finance to formulate the annual plan of total limit on foreign commercial borrowing by enterprises for submitting to the Prime Minister for approval.
Article 4. The Plan of total limit shall be formulated on the following main basis:
1. The national strategy of foreign borrowing and repayment formulated by the Ministry of Planning and Investment for each period of time;
2. The annual plan of foreign borrowing and repayment formulated by the Ministry of Finance;
3. The international Balance of Payment, the capability of the country to balance the foreign currency requirement;
4. The requirement of foreign borrowing and the repayment obligations of enterprises;
5. The practical performance of foreign borrowing and repayment of enterprises in previous years.
Article 5.
1. The plan of total limit shall be divided into two following parts:
a. The limit on short-term foreign borrowing;
b. The limit on medium, long-tem foreign borrowing.
2. The plan of total limit shall be calculated in accordance with the Appendix No. 1 attached to this Regulation.
Article 6.
1. Upon the formulation of the Plan of the total limit, the State Bank shall reconcile with following assessment targets:
a. The total debt service of the planned year shall not exceed 20% of the total value of exports and services of the current year;
b. The total debts of Vietnam in the planned year shall not exceed 165% of the total value of exports and services of the planned year;
c. The total debts of Vietnam in the planned year shall not exceed 50% of the gross domestic production;
d. The forecasted Balance of Payment.
2. In the event the plan of total limit is not formulated in compliance with the targets provided for in paragraph 1 of this Article, the State Bank shall stipulate, adjust the mechanism, the policy to manage the plan of total limit to make it satisfying the requirement of funds for the economy and at the same time to ensure the debt service capacity at the appropriate, prudent level.
Chapter III
MANAGEMENT OF THE PLAN OF TOTAL LIMIT
Article 7. The management of the annual limit on short-term foreign borrowing shall be carried out on the following basis:
1. The conditions of short-term foreign borrowings provided for by the Governor of the State Bank from time to time, provisions of the Circular No. 03/1999/TT-NHNN7 dated 2 August, 1999 of the State Bank guiding the implementation of the foreign borrowing and repayment of enterprises;
2. Provisions of the Prime Minister for the management of exports and imports from time to time;
3. The actual short-term debt balance in relation to the approved level from time to time.
Article 8. The management of the annual limit on medium, long-term foreign borrowing shall be carried out on the following basis:
1. The conditions of medium, long-term foreign borrowing provided for by the Governor of the State Bank from time to time, provisions of the Circular No. 03/1999/TT-NHNN7 dated 2 August, 1999 of the State Bank guiding the implementation of the foreign borrowing and repayment of enterprises;
2. The foreign exchange control policy;
3. The orientation of the social-economic development in each period of time and the planned development of branches, geographical areas, with focus on the projects satisfying conditions for preferential borrowing and in need of prioritization.
4. Criteria of foreign repayment.
Article 9. The State Bank shall regularly monitor, assess the performance of foreign borrowing in order to have timely adjustment of the mechanism, policy in the management of the plan of total limit.
Article 10. Under special circumstances, the State Bank shall report to the Prime Minister for consideration and decision on medium, long-term foreign loans which are in excess of the limit approved by the Prime Minister.
Charter IV
ORGANISATION OF IMPLEMENTATION
Article 11. The Foreign Exchange Control Department shall have the responsibility:
1. To prepare the annual plan of total limit on November each year submitting to the Governor for submission to the Prime Minister;
2. To monitor developments of the short-term foreign borrowing balance and the medium, long-term borrowing in relation with the plan of total limit, necessary economic targets in order to make assessment, analysis and proposals on the policy, management mechanism for timely submission to the Governor for decision or for reporting to the Governor for submissions to the Prime Minister of issues which are beyond the competence of the Governor.
3. To open books to compile the statistics and timely monitor the developments.
Article 12. Responsibility of Departments
The Monetary Policy Department and related Departments of the State Bank shall be responsible to coordinate with the Foreign Exchange Control Department in the formulation, management of the annual plan of total limit.
Chapter V
IMPLEMENTATION PROVISIONS
Article 13. The amendment, supplement of provisions of this Regulation shall be decided upon by the Governor of the State Bank.
APPENDIX 1
METHODOLOGY TO CALCULATE THE TOTAL LIMIT
1. Short-term foreign borrowing
Since short-term foreign borrowing is mainly used to pay for the import and to supplement to the operating funds, only a small part is used for another purpose, the import data can, therefore, be considered as a factor to estimate the short-term debt balance (including borrowing and guarantee by credit institutions operating in VN)
Formula | Note |
A t + 1 = At x | At: The highest short-term outstanding debt for the service of import of current year. A t + 1: The short-term outstanding debt limit for the planned year N t: Import of current year N t + 1: Expected import of planned year |
2. Medium, long-term foreign borrowing
a. Borrowing by foreign invested enterprises
The borrowing requirement of foreign invested enterprises is objective since the borrowing component of the investment projects have been approved.
Formula | Note |
Z t - 1 = x 100 (i = 0, ... n) Y = E t + 1 = FDI t + 1 x Y | FDI t: the foreign direct investment of current Year. FDI t+1: the foreign direct investment of planned year. E t: Medium, long-term foreign borrowing value which has been signed by foreign direct invested enterprises for the current year E t+1: Limits on medium, long-term borrowing by foreign invested enterprises for the planned year. Z i: The percentage of medium, long-term borrowing value of foreign invested enterprises in a year and the foreign direct investment in corresponding year. Y: weighted average ratio of borrowing value signed by direct foreign invested enterprises and the percentage Z of the corresponding year. |
b. Borrowing by Vietnamese enterprises:
Formula | Note |
H = I - Sd - Gc FDI t+1 - D in which: CAD = I - Sd H = CAD - Gc FDI t+1 - D K = H x D = A t+1/X%
| I: Total investment. Sd: Domestic savings. Gc: Disbursement of foreign loans of Government in the planned year (including ODA). H: Requirements for the medium, long-term borrowing by Vietnamese enterprises. K: Limits on medium, long-term borrowing by Vietnamese enterprises. CAD: Current account deficit D: Short-term borrowing value which has been signed for the planned year. X: Percentage ratio of the short-term outstanding debt and short-term borrowing value which has been signed for previous years. The observation of foreign borrowing and repayment by enterprises reveals that: Foreign borrowing enterprises usually withdraw funds over a period of 3 year at the ratio of 40 - 30 - 30. |
c. Limits on medium, long-term foreign borrowing by the enterprises:
HM = K + E t+1
In which:
HM : Limits on medium, long-term foreign borrowing by the enterprises.
K : Limits on medium, long-term foreign borrowing by Vietnamese enterprises.
E t+1 : Limits on medium, long-term foreign borrowing by foreign invested enterprises for the planned year.
